Chap 9: Closing and Settlement Flashcards
1
Q
- Jenny-Jane Parhaddy of Winding River, Tennessee wants to sell the Olinda property her father left her. She gets an offer of $500,000. How much must be withheld by the buyer at closing to comply with Hawaii state tax requirements?
a. $25,000
b. $50,000
c. $75,000
d. Nothing. It is illegal to discriminate against out-of-state sellers in real estate transactions.
- Jenny-Jane Parhaddy of Winding River, Tennessee wants to sell the Olinda property her father left her. She gets an offer of $500,000. How much must be withheld by the buyer at closing to comply with Hawaii state tax requirements?
A
a. $25,000
Answer: A $25,000 because is 5% of 500k, and 5% is the HARPTA withholding. The question does not state FIRPTA just Hawaii state tax.
2
Q
- The purpose of Hawaii’s Good Funds Act is:
a. To make sure all buyers are qualified to make their monthly payments.
b. To ensure that all the seller’s liens are paid at closing.
c. To guarantee the buyer has enough cash to close the sale.
d. To permit escrow to delay closing until all the buyer’s checks have cleared and the lender’s funds are on deposit with escrow.
- The purpose of Hawaii’s Good Funds Act is:
A
d. To permit escrow to delay closing until all the buyer’s checks have cleared and the lender’s funds are on deposit with escrow.
Answer: D
3
Q
- Real Property taxes in Hawaii are:
a. Due semi-annually on January 1 and July 1.
b. Due annually in advance as of January 1.
c. Due annually in arrears as of December 31.
d. Once levied, a lien on the property until paid.
- Real Property taxes in Hawaii are:
A
d. Once levied, a lien on the property until paid.
Answer : D
4
Q
- Which is NOT true regarding real property taxes?
a. An exemption is available to owner/occupants.
b. Senior citizens qualify for an extra exemption.
c. There is no appeal process for homeowners who think their assessment is too high.
d. To qualify for an owner occupant exemption, ownership must be recorded at the Bureau of Conveyances.
- Which is NOT true regarding real property taxes?
A
c. There is no appeal process for homeowners who think their assessment is too high.
ANSWER: C
5
Q
- Clothilde brought her money to escrow at closing and was desperate for the sale to record immediately so she and her dog could move in, but closing was delayed until the escrow agent could verify that the loan funds had actually been deposited and all other checks had been cleared. This is an example of:
a. Blue Sky Law
b. Uniform Land Sales Practices Act
c. Good Funds Act
d. Transfer Certificate of Title
- Clothilde brought her money to escrow at closing and was desperate for the sale to record immediately so she and her dog could move in, but closing was delayed until the escrow agent could verify that the loan funds had actually been deposited and all other checks had been cleared. This is an example of:
A
c. Good Funds Act
Answer: C
6
Q
- An exception to requirements of the Good Funds Act is allowed if:
a. The buyer demonstrates, by way of a clean credit report, that s/he has never bounced a check.
b. The buyer and seller instruct escrow in writing to close the sale before all funds are available for distribution.
c. The seller waives the requirement verbally in a phone conversation with the escrow officer.
d. The buyer’s funds are in Certificates of Deposit that won’t mature until five days after the scheduled closing date, and he doesn’t want to lose any interest on them.
- An exception to requirements of the Good Funds Act is allowed if:
A
b. The buyer and seller instruct escrow in writing to close the sale before all funds are available for distribution.
ANSWER: B
7
Q
- Prior to closing the seller has received the bill but not paid the real property taxes for the previous semi-annual period. The closing date is in the current semi-annual period. Which is true regarding that tax bill?
a. Escrow will debit the seller the full amount and pay it to the county real property tax office at closing.
b. The seller must pay the entire tax bill prior to closing.
c. Escrow will prorate the bill between the buyer and seller based on the closing date and pay it to the county real property tax office at closing.
d. None of the above.
- Prior to closing the seller has received the bill but not paid the real property taxes for the previous semi-annual period. The closing date is in the current semi-annual period. Which is true regarding that tax bill?
A
a. Escrow will debit the seller the full amount and pay it to the county real property tax office at closing.
Answer: A
8
Q
- If the Hawaii standard title insurance policy costs $900, which is correct?
a. Buyer pays $225, seller pays $675
b. Buyer pays $450, seller pays $450
c. Buyers pays $540, seller pays $360
d. Buyer pays $360, seller pays $540.
- If the Hawaii standard title insurance policy costs $900, which is correct?
A
d. Buyer pays $360, seller pays $540.
Answer: D
9
Q
- To ensure the payment of income taxes on the gain, a resident of France selling a piece of vacant land in Hawaii would be subject to:
a. Withholding of 5 percent of the sale price.
b. Withholding of 10 percent of the sale price.
c. Withholding of 15 percent of the sale price.
d. No withholding. Foreign owners of real property in the USA are not subject to taxation on the sale of such property.
- To ensure the payment of income taxes on the gain, a resident of France selling a piece of vacant land in Hawaii would be subject to:
A
.
c. Withholding of 15 percent of the sale price.
Answer: C, 15%
10
Q
- Who is ultimately responsible for the withholding of taxes on the sale of real property owned by a non-resident?
a. The seller
b. The buyer
c. The escrow company
d. The listing broker
- Who is ultimately responsible for the withholding of taxes on the sale of real property owned by a non-resident?
A
b. The buyer
Answer: B
11
Q
- Which of the following is true?
a. Buyer and seller may agree in writing that the buyer will pay the survey, termite inspection and the broker’s commission.
b. The buyer may unilaterally instruct escrow that the seller will pay the entire escrow fee.
c. The tenant’s rent, paid on the first of the month is retained entirely by the seller regardless of the date of closing.
d. The tenant’s security deposit is prorated between the buyer and the seller.
- Which of the following is true?
A
a. Buyer and seller may agree in writing that the buyer will pay the survey, termite inspection and the broker’s commission.
Answer: A
12
Q
- A sale closes on January 31. The seller has received the tax bill for the first half of the year but has not paid it. What will happen?
a. The seller will be penalized for not paying the tax bill on time.
b. The seller will be debited for 30 days of the tax bill, and the buyer will be debited for the remaining 5 months and escrow will then pay the entire bill on their behalf.
c. The tax bill will not be due until February 20, at which point the buyer will pay for it.
d. The tax bill will not be due until February 20, at which point each party will pay his share.
- A sale closes on January 31. The seller has received the tax bill for the first half of the year but has not paid it. What will happen?
A
b. The seller will be debited for 30 days of the tax bill, and the buyer will be debited for the remaining 5 months and escrow will then pay the entire bill on their behalf.
Answer: B
