Elements of Escrow

Question 1

The Escrow Law is intended to protect members of the public who entrust their money or other assets to independent escrow agents in California as established by the provisions of the

(a) California Real Estate Commissioner’s Regulations
(b) California Civil Code
(c) California Financial Code
(d) California Penal Code

Answer 1

(c) California Financial Code

Question 2

3: The guidelines and regulations that govern escrow practices and agents have been established by the
(a) The California Department of Consumer Affairs
(b) The California Department of Justice
(c) The California Bureau of Insurance
(d) The California Department of Corporations

Answer 2

(d) The California Department of Corporations

Question 3

An escrow agent must file a surety bond with the commissioner of the DOC in the amount of at least

(a) $25,000
(b) $15,000
(c) $5,000
(d) $2,500

Answer 3

(a) $25,000

Question 4

Monies placed with the escrow holder that belong to someone else are referred to as

(a) Transfer funds
(b) Trust funds
(c) Trustee funds
(d) Transaction funds

Answer 4

(b) Trust funds

Question 5

The California Bureau of Real Estate reference manual stipulates that fees for the referral of services paid to a real estate agent by an escrow holder is illegal except for escrow holders such as

(a) Real estate brokers
(b) Title insurance companies
(c) Both a and b
(d) Neither a nor b

Answer 5

(c) Both a and b

The California Bureau of Real Estate reference manual stipulates that it is illegal for an escrow holder to pay a real estate agent fees for the referral of services, and it is illegal for the real estate agent to receive such fees. The BRE does not limit such a prohibition to controlled escrow holders such as real estate brokers and title insurance companies.

Question 6

The newly formed abstract companies offered the abstract of title, similar to today’s preliminary title report, which provided the buyer with a written history of all recorded documents concerning a property

(a) Carried with it an attorney’s legal opinion
(b) Offered protection for damages from a defective title
(c) Both a and b
(d) Neither a nor b

Answer 6

(a) Carried with it an attorney’s legal opinion

Question 7

The Escrow Law (Division 6 of the CFC) provides that independent escrow agents must be licensed by the commissioner of Corporations except for

(a) Banks, savings and loan associations
(b) Title insurance companies
(c) T rust companies, attorneys, and real estate brokers
(d) All of the above

Answer 7

(d) All of the above

Question 8

The purpose of the Escrow Law Advisory Committee is to assist the commissioner in the implementation of his duties under the Escrow Law. The Committee is comprised of 11 members, including the commissioner or his designee. Its members, who are appointed by the commissioner

(a) Serve for a period of two years
(b) Receive no compensation or reimbursement for expenses
(c) Both a and b
(d) Neither a nor b

Answer 8

(c) Both a and b

Question 9

The bilateral escrow agreement or instructions is used almost exclusively

(a) Almost exclusively In Southern California
(b) Almost exclusively In Northern California
(c) Both a and b
(d) Neither a nor b

Answer 9

(a) Almost exclusively In Southern California

Question 10

Escrow is predominately the business of title companies

(a) In Northern California
(b) In Coastal California
(c) In Southern California
(d) In Central California

Answer 10

(d) In Central California

Question 11

If a buyer or a seller has a federal or state tax lien

(a) it is up to the buyer or the seller to resolve it
(b) It is up to the escrow holder to resolve it
(c) It is up to the title officer to resolve it
(d) It cannot be resolved unless the taxes are paid

Answer 11

(a) it is up to the buyer or the seller to resolve it

Question 12

Governed by the content and provisions of the escrow, escrow is considered

(a) A full agency relationship
(b) A limited agency relationship
(c) The same as an attorney-in-fact under a power of attorney
(d) None of the above

Answer 12

(b) A limited agency relationship

Question 13

California law requires the escrow holder to have a manager who possesses a minimum of

(a) Three years of responsible escrow experience
(b) Five years of responsible escrow experience
(c) Seven years of responsible escrow experience
(d) Ten years of responsible escrow experience

Answer 13

(b) Five years of responsible escrow experience

Question 14

Escrow professionals in California have two primary professional associations in which membership is offered to all escrow professionals,

(a) The American Escrow Association and the California Escrow Association
(b) The National Escrow Association and the California Escrow Professionals Organization
(c) The American Escrow Professionals Organization and the California Escrow Agency
(d) None of the above

Answer 14

(a) The American Escrow Association and the California Escrow Association

Question 15

It is a growing practice for escrow companies to outsource notary duties to independent notaries for performing notary services

(a) Which may never be assigned to an escrow assistant
(b) Which, however, may be assigned to an escrow assistant
(c) Which may otherwise only to performed by the escrow officer
(d) None of the above

Answer 15

(b) Which, however, may be assigned to an escrow assistant

While it is a growing practice for escrow companies to outsource notary duties to independent notaries, notary responsibilities may be assigned to the assistant.

Question 16

Management of the escrow department or office calls for an experience level and history that includes most types of transactions, including

(a) Bulk sales and business opportunities
(b) Transfer of liquor license
(c) Builder services
(d) All of the above

Answer 16

(d) All of the above

Question 17

For controlled escrows handled by federally chartered banks or federally chartered savings and loan associations, the regulatory agency is

(a) The Office of the Comptroller of the Currency
(b) The Federal Deposit Insurance Corporation
(c) The Federal Reserve Board
(d) The Security and Exchanges Commission

Answer 17

(a) The Office of the Comptroller of the Currency

Question 18

A grant that may be deposited by the grantor with a third person, to be delivered on performance of a condition and while in the possession of the third person, is

(a) an escrow.
(b) a bailee.
(c) a promisor.
(d) encumbered.

Answer 18

(a) an escrow.

Question 19

Background checks are required of all independent escrow company personnel EXCEPT

(a) stockholders.
(b) managers.
(c) employees.
(d) real estate agents.

Answer 19

(d) real estate agents.

Question 20

The independent escrow office manager must have

(a) 3 years’ experience.
(b) 5 years’ experience.
(c) 7 years’ experience.
(d) 10 years’ experience.

Answer 20

(b) 5 years’ experience.

Question 21

The escrow holder holds documents and money as a

(a) neutral depository for only one principal.
(b) neutral depository for both principals.
(c) partial agent for the seller.
(d) partial agent for the buyer.

Answer 21

(b) neutral depository for both principals.

Question 22

Title policies offer financial protection and recourse to the

(a) escrow company if it commits an error in its search.
(b) seller carrying financing for the buyer if the buyer fails to pay.
(c) buyer who becomes insolvent.
(d) buyer who is financially damaged by the title company’s faulty search.

Answer 22

(d) buyer who is financially damaged by the title company’s faulty search.

Question 23

Escrow agents may resolve disputes as impartial arbitrators

(a) always.
(b) if the escrow officer manager allows.
(c) if the escrow has the CSEO professional designation.
(d) never.

Answer 23

(d) never.

Question 24

Escrow companies, other than broker-owned companies, are regulated by the

(a) Department of Real Estate.
(b) Department of Justice.
(c) Department of State.
(d) Department of Corporations.

Answer 24

(d) Department of Corporations.

Question 25

Independent escrow agents are required to possess liquid assets in the amount of

(a) $25,000.
(b) $50,000.
(c) $100,000.
(d) $200,000.

Answer 25

(a) $25,000.

Question 26

Which of the following is a position at an escrow company?

(a) Escrow advisor
(b) Junior escrow officer
(c) Escrow facilitator
(d) None of these

Answer 26

(b) Junior escrow officer

Question 27

As the principals direct the transaction, the escrow holder is said to be more

(a) reactive than proactive.
(b) proactive than reactive.
(c) active than reactive.
(d) reactionary than proactive.

Answer 27

(a) reactive than proactive.