Chapter 13 - Taking Title to Real Property and Close of Escrow Flashcards
Common closing costs include:
loan origination fee discount points appraisal fee credit report cost tax service fee private mortgage insurance (PMI) mortgage insurance premium (MIP) Veterans Administration Funding Fee County Transfer Tax City Transfer Tax Recording Fees Home Warranty Policy Commissions Tax and Insurance Impounds Wire Transfer fee Notary Fee Prepaid interest Other fees including: drawing fee prepayment penalty beneficiary demand fee deed of reconveyance/ reconveyance deed prorated rents homeowner's transfer fee flood certification fee roof certification fee wire fee / courier fee/ federal express fee
Knowing all the closing costs before they are incurred will reduce mistakes made by the agent and eliminate surprises for buyers.
Closing costs
Costs incurred by the buyer and seller in the escrow closing process.
Usually grouped into RECURRING and NON-RECURRING closing costs
Recurring - occurs more than once (property taxes, homeowners insurance)
Non-recurring - occur only once (escrow and title insurance fees)
Loan Origination Fee
Fee lenders charge a borrower to originate a loan.
VA Funding Fee
Fee charged by the Dept of Veteran Affairs (VA) to guarantee a VA loan.
County Transfer Tax
$0.55 per $500 tax charged by county tax assessor to transfer real property in the county.
Charged on new money in the transaction, not loan assumptions.
Prorated Rents
Seller already collected rents for the month.
Close of escrow is in the middle of the month, part of the rents must be paid to the buyer.
Flood Certification
Identifies whether a property is in a flood zone.
Severalty
A person owns a parcel of real property as sole ownership
Tenancy in Common / Tenants in Common (TIC)
Concurrent ownership by two or more persons, each with an undivided interest – but not necessarily equal – and without right of survivorship.
TIC occurs when 2 or more people own a property together and can will each of their portions to their own heirs. They both have possession of the property, own unequal shares with the right possession, and can will their ownership portion to their heirs (no right of survivorship)
Joint Tenancy
Form of concurrent ownerships in which two or more people own a parcel of real property with the unities of time, title, interest, and possession.
Also has a right of survivorship.
What is Tenancy in Partnership and what are the 3 types?
When Two or more people own a parcel of real property as a partnership.
General partnership - partnership that exposes the partners to unlimited liability including other assets besides the partnership property.
Limited partnership - minimizes an investors liability exposure because the investor can only lose what was invested into the property.
Syndicate venture / syndication - may have 2 entities: a general partner and limited partners. When real estate investors come together to buy a parcel of real property
A “Blind pool” syndicate venture is a syndication in which the property investors have no property information and have given the general partner money to find and acquire an appropriate property.
Stock Cooperative
A corporation that owns an entire property.
Each shareholder owns a portion of shares in the corporation and has the right to occupy a specific unit.
Limited Liability Company (LLC)
Shields personal assets from property liability and has a flexible management structure and tax reporting.
Corporation
Separate legal entity that is used as a vehicle to hold real property.
Methods of Acquiring and Transferring Title to Real Property in CA
Transfer - deeds (most common way)
Will - written instrument used to dispose of real and personal property after a person’s death
Succession - when a person dies without a will but has heirs, the law provides for disposition of the person’s property to their heirs
Accession - annexation , accretion
Occupancy - adverse possession , government patent
