Chpt 16 - Escrow & Closing Flashcards
What is an affidavit of value and who signs?
Sworn statement under oath indicating purchase price paid by buyer that must be filed w/deed. Signed by buyer & seller.
Describe when something is in “arrears.”
When you owe payment on things that you have use of but have not paid for. Example: property taxes paid in arrears.
Another name for arrears?
Accrued Expenses
What is a Bring Down Endorsement?
Extension of title search to verify no liens filed against property between time of original search and recording of deed or mortgage.
Another name for Bring Down Endorsement.
Continuance
Number of days in a calendar year.
365
A Closing Disclosure is ____________.
A settlement statement prepared by lender or closing agent itemizing all expenses and costs paid by buyer and seller needed to close the RE transaction (RESPA related transactions).
A Constructive Notice is __________.
A notice given by publication in newspaper, recording or other method.
A Credit is __________ and __________.
a. Availability of money; ability to borrow money
b. Sum of money to be received
Describe a deed.
Written instrument transferring grantor’s ownership of, or interest in, real property.
A Debit is __________ and __________.
a. Sum of money owed
b. Charge on a closing statement
An escrow is __________.
a. things of value are held on behalf of the transaction parties
b. by a disinterested third party
c. until specified conditions are all met.
An escrow company is __________.
a disinterested clearing house via which title to real property is closed and/or escrow funds are held in trust.
An Escrow Officer is also called a __________, __________, or __________.
a. Closing Officer
b. Settlement Officer
c. Closing Agent
Who is the Escrow Officer?
a. Person charged w/coordinating activities and documentation necessary for completing RE transaction.
b. Usually prepares settlement statement and conducts closing.
FIRPTA stands for __________.
Foreign Investment Real Property Tax Act
FIRPTA is a ___________ law that __________.
Federal law that subjects disposition of a U.S. real property interest held by foreign person to income tax withholding.
Tax form indicates seller’s proceeds from sale/transfer of RE that settlement officer submits to IRS.
IRS Form 1099-S
Kickbacks are __________, __________ and __________.
a. Fees or other compensation given for services not performed
b. means of undisclosed commission for business referrals
c. prohibited by RESPA
What is a levy?
Legal seizure of individual’s property to satisfy IRS tax debt
Marketable Title is __________, __________, and __________.
a. title to real property
b. reasonably free of defects & encumbrances
c. may require unbroken chain of recorded title for statutory number of years
Proration is __________.
Allocation of expenses, RE taxes or rents between buyer & seller in proportion to their actual use.
RESPA stands for __________.
Real Estate Settlement and Procedures Act
RESPA is a ___________ law, deals with __________, provides for __________, implemented by __________, and oversight of __________.
a. Federal law
b. deals with RE closings
c. provides procedures for disclosure of settlement costs
d. Regulation X
e. Oversight by Consumer Financial Protection Bureau
Describe Settlement Services.
Any service provided in connection with settlement of RE transaction (to lenders, property inspectors, attorneys, appraisers, etc.)
Number of days in a Statutory Year.
360 days, 30 days per month
Title is __________.
Right to or ownership of land
What does a Title Company do?
a. Examine and insure title claims for real estate purposes via thorough examination of property records.
Title Insurance indemnifies __________ against __________.
a. policy holder
b. losses resulting from undiscovered title defects & encumbrances
Title report is issued by __________, discloses ___________, and is evidence of __________.
a. title company
b. condition of title for specific property
c. marketable title
Close of escrow is also known as __________ or __________.
a. settlement
b. closing
What provides the escrow instructions for handling & disbursing escrow funds?
Sales contract
The final step in RE transaction when transfer of real property ownership from seller to buyer occurs in exchange for payment.
Close of Escrow
aka Settlement; Closing
An escrow company __________.
Performs closing duties and handles the money.
Escrow agent refers to __________.
The company.
Escrow officer refers to _________.
The title clerk.
What does a title company do?
Search history of properties and reports on them.
Does a title company handle money?
No
Title that is free and clear from undisclosed encumbrances or defects that would expose purchaser to litigation or impede ability to enjoy the property or later sell the property easily is called ___________.
Marketable Title
A report that states the current title status of a property is called a ___________.
Preliminary title report
A title search encompasses both the __________ and the __________.
a. property
b. seller
When is a bring down endorsement issued?
After final title search but before COE
What is the purpose of a bring down endorsement?
Verify everything is the same as the preliminary title report.
What does a title company issue at COE?
Title insurance
What is title insurance?
a. insurance policy
b. guarantees title to property is good title
c. insures policyholder against loss or damages from defects in title
What offers the best proof of marketable title?
Title insurance policy
What is shown on a survey?
a. Exact boundaries of property
b. Any encroachments
An escrow officer acts as a ___________.
Fiduciary
An escrow officer is responsible for __________.
Retaining documents and entrusted assets until specified conditions are fulfilled.
What agency regulates, bonds and licenses escrow agents?
Arizona Department of Financial Institutions
A claim used as security for an IRS debt is called __________.
A tax lien
The legal seizure of an individual’s property to satisfy an IRS debt is called __________.
A levy
When must an escrow officer submit IRS Form 1099-S?
Title transfers for sale of principal residences with gross sales prices above $500,000 married and $250,000 single
Rents, interest, association fees and taxes are all examples of ____________ items that will show on a settlement statement.
Prepaid
Settlement statements are also known as __________.
Closing disclossure
Prorations are computed as of the __________ date.
Close of escrow date
Does recordation of title transfer title?
No.
What transfers title?
Act of delivery and acceptance of title
What instrument conveys a grantor’s interest in real property?
A deed
What document must accompany a deed?
Affidavit of value
Who must sign an affidavit of value?
Buyer and seller
What is the financial document that indicates who owes what and to whom?
Settlement Statement
A standard settlement statement is called __________.
Closing disclosure
Commissions belong to whom?
Designated broker
If a salesperson is working for a different broker at the time of closing, who pays the salesperson?
Salesperson gets paid by broker they worked for at time they earned the commission.
Does death or incapacity of one of the parties to an escrow terminate the contract?
No so long as a valid escrow has been setup and a binding and enforceable contract of sale and fully executed deed have been deposited with escrow holder.
What is the final step in the closing process?
Recordation
Where are documents filed/recorded?
With county recorder in the county where the property is located.
What type of notice does the act of recording provide?
Constructive (legal) notice
