Chapter 10: Escrow, Transaction Coordinators, and Title Insurance

Question 1

The processing, by a neutral party, of the paperwork and money involved in a sale or other real estate transaction.

Answer 1

Escrow

Question 2

An escrow business conducted by a licensed escrow holder who accepts documents and funds while representing each party equally.

Answer 2

Neutral depository

Question 3

An employee of a licensed escrow company who acts as the agent.

Answer 3

Escrow officer

Question 4

A formal demand statement from the lender that details the amounts owed, as calculated by the lender, for the purpose of paying off the loan in full.

Answer 4

Payoff demand statement

Question 5

The date that the documents are recorded.

Answer 5

Closing date

Question 6

Formal instructions drawn from the information contained in the original agreement, usually the signed purchase contract.

Answer 6

Escrow instructions

Question 7

The process of proportionately dividing expenses or income to the precise date that escrow closes, or any other date previously agreed upon.

Answer 7

Proration

Question 8

A written report given by a licensed pest control company, identifying any wood-destroying pests or conditions likely to cause pest infestation.

Answer 8

Structural pest control certification report

Question 9

A recorded public history of a specific property.

Answer 9

Chain of title

Question 10

This policy insures a lender and/or property owner against losses that result from imperfections in title.

Answer 10

Title insurance

Question 11

A report showing the condition of the title before a sale or loan transaction.

Answer 11

Preliminary title report

Question 12

A basic title insurance policy.

Answer 12

CLTA (California Land Title Association)

Question 13

This federal law covers first loans on 1-4 residential dwellings and allows borrowers to shop for settlement services.

Answer 13

RESPA (Real Estate Settlement Procedures Act)

Question 14

A statement by a lender, under a deed of trust, that provides information, such as the unpaid balance, monthly payment, and interest rate, necessary if the loan is to be assumed.

Answer 14

Beneficiary’s statement

Question 15

At the close of escrow, if a seller decides not to pay the commission, the broker/agent can file this in court.

Answer 15

Civil action

Question 16

For proration, all escrow companies use this number of days as a base month.

Answer 16

30 days

Question 17

To begin a title search, the borrower first completes this form.

Answer 17

Statement of information

Question 18

When one company agrees to indemnify another for loss in return for periodic premium payments, it is called this.

Answer 18

Insurance

Question 19

An extended coverage policy that insures against many exclusions in the standard coverage policy.

Answer 19

ALTA (American Land Title Association)

Question 20

A person who helps agents and brokers keep track of and complete the transaction through closing of escrow.

Answer 20

Transaction coordinator

Question 21

The processing of paperwork and money involved in a sale or other real estate transaction is called:

a. property transfer.
b. acknowledgment.
c. escrow.
d. none of the above.

Answer 21

c. escrow.

Question 22

Which of the following is a requirement of a valid escrow?

a. signed instructions
b. neutral third party
c. conditional delivery
d. all of the above

Answer 22

d. all of the above

Question 23

Of the following, which would be the last function in an escrow sequence of events?

a. recording and issuing of title policy
b. request of new loan documents
c. adjustments and prorations
d. none of the above

Answer 23

a. recording and issuing of title policy

Question 24

In California, an independent escrow company:

b. must be a corporation.
b. is governed by the Department of Business Oversight.
c. both a and b.
d. none of the above.

Answer 24

c. both a and b.

Question 25

The best way that escrow instructions can be changed, once they have been drawn and signed by each party, is by:

a. the escrow officer.
b. mutual consent of the parties.
c. the listing broker.
d. operation of law.

Answer 25

b. mutual consent of the parties.

Question 26

Escrow information is usually taken from the:

a. California Residential Purchase Agreement and Joint Escrow Instructions.
b. title policy.
c. Transfer Disclosure Statement.
d. all of the above.

Answer 26

a. California Residential Purchase Agreement and Joint Escrow Instructions.

Question 27

When calculating prorations, how many days are in the standard base period?

a. 31 days
b. 30 days
c. 28 days
d. depends on the month being prorated

Answer 27

b. 30 days

Question 28

What title policy would cover most of the exclusions of a standard policy?

a. ALTA
b. MLTA
c. CLTA
d. all of the above

Answer 28

a. ALTA

Question 29

Escrow companies are selected by:

a. the broker.
b. the buyer and seller.
c. the seller only.
d. the agent only.

Answer 29

b. the buyer and seller.

Question 30

Which of the following is an annual recurring charge?

a. county recording fees
b. title insurance fees
c. escrow fees
d. property tax fees

Answer 30

d. property tax fees