Chapter 3 Flashcards
1. Checklists, methods of closing, escrow process 2. Title search, surveys, property insurance 3. Roles of real estate, seller/buyer, lease certificate 4. Things that take place during actual closing and after
Why foreal estate companies use a closing check list?
To make sure all details of the closing have been covered and all pertinent documents are in house ready for buyers and sellers to sign
What is the difference between a face to face closing and closing in escrow?
The procedure of closing in escrow is basically the same as face to face closing except all documents are sent to an escrow agent
What is escrow?
The process in which a disinterested third party holds all money and documents relating to a transaction until all the terms and conditions of the escrow instructions have been satisfied
List 3 activities that take place during the escrow period?
- Getting an appraisal
- Ordering pest control and other inspection reports
- Obtaining property insurance
- Order complete title search and insurance
- Arranging and approving financing
- Getting all paperwork in order
A seller is required to deliver a marketable title at closing. The bank will require the title search to reveal:
- Legal description of the property
- Owners of record
- Any outstanding liens or encumbrances on the property
What are some examples of items the title company will protect the policy holder against losses that arise from such huddle defects with an insurance policy?
- Forced documents (deeds/mortgages)
- Undisclosed heirs
- Mistaken legal interpretation of will
- Misfiled documents
- Confusing arising from similarity of names
- Incorrectly stated marital status
- Mental incompetence
What does say survey do?
Shows footprint of the house and any deck, patio, garage or carport. Shows any building property fences or swimming pool
Any problem found with either the physical layout of the property or in the title search results creates a what?
Cloud in title that must be resolved prior to closing on the loan
What might borrowers have to file in order to remove the fault of title so the loan process can move forward?
A suit to quiet title
What are some examples of a cloud in title?
Mechanics lien Income tax lien Property tax lien Encroachment Zoning violation Deed problems
What is the difference between the two forms of home insurance available?
HO-2: lists what is covered
HO-3: lists what’s excluded
This clause required that the homeowner have insurance that is equal to 80% of the homes replacement value
Coinsurance clause
What does a title search reveal
Legal description of the property
The owners of record
Any outstanding liens or encumbrances on property
What happens if any problem is found with either the physical layout of the property or in the title search results?
It creates a cloud on the title that must be resolved prior to closing on the loan
What is an HO-2 policy?
A basic homeowners property insurance
What does a coinsurance clause required?
This clause required that the homeowner have insurance that is equal to 80% of the homes replacement value. This does not include the price of the land
Buildings with three or more dwelling units, commercial buildings, and industrial buildings must have what?
A certificate of occupancy (C of O)
When do most of the important activities regarding a closing happen?
During the period between the signing of the agreement of sale and the actual closing date
Lost three things a licensed should do to help facilitate a closing
- Check with lender to see how loan approval is coming along
- Check the appraisal results and help the client decide how to proceed if it comes in low
- Keep track of any special provisions included in the sale, such as items of personal property
What can a lender require a borrower to do with regard to taxes and insurance and why would the lender make this requirement
Lenders can require the borrower to maintain and escrow account for property taxes and insurance so that the lender is sure money will be available for the payments
Lost three things a buyer may want to do during escrow period
Have a complete inspection done
Find out the results of appraisal
Find out if the title search revealed any problems that could affect the closing
Settlement is also refereed to as
Title closing - culmination of real estate transaction
Transfers the property from seller to buyer
The deed
Transfers all the personal property that is being sold along with the house
The bill of sale
A sworn, notarized statement by the seller confirming ownership of the property and describing any known title defects such as leases, liens, or work on the property that could potentially create liens, boundary line disputes, or outstanding contracts for the sale of the property
The affidavit of title or sellers affidavit
Shows all the monetary transfers between the seller and buyer
Buyer/seller settlement statement
Provides evidence of the borrowers debt to the lender, a description of the loan, and a means for the lender to transfer or collect debt
The note
The buyers agreement to put the property up as collateral for the loan
Mortgage
Prepared by the lender if the borrower is assuming current sellers loan
Mortgage deducting certificate
Form the borrower completed when he or she first applied for the loan
Loan application.
Standardized explanation of the financial terms of the loan
Truth in lending discloser (TILA)
Is it legal requirement for a deed to be recorded in the county clerks office?
No, it is not a must but it’s a good idea to offset any future problems
What does a bill of sale do
Transfers all personal property that is being sold along with the house
When is a mortgage certificate used and what does it show
The mortgage reduction certificate is used if the buyer is assuming the current sellers loan and shows the exact amount of the balance as the closing date, the interest rate, and the date of the last payment
What is proration
The dividing up of a bill or expense that both the seller and the buyer owe some portion of
When dies the title to the property actually transfer
When the deed is delivered and accepted by the buyer
Typically when does a purchaser receive the original deed and the title insurance policy?
Several weeks after the closing
N order to protect their interest Ina a property, lenders typically require title insurance and
Home owners insurance
