objective 1: identify the issues of particular interest to the buyer and seller as a real estate transaction closes Flashcards
What are the 2 major events involved in closing?
1) promises made in the sales contract are fulfilled
2) the mortgage funds are distributed to the buyer
Promises made in the sales contract are fulfilled during ___
closing
when are mortgage funds distributed to the buyer?
during closing
Both buyers & their lenders must be sure that the seller can deliver the title that was promised in the purchase agreement and that the property is now in essentially the same condition it was in when the buyers and the sellers agreed to make the sale. This involves inspecting which 6 things?
1) title evidence
2) seller’s deed
3) any documents demonstrating the removal of undesired liens and encumbrances
4) the survey
5) the results of any required inspections (e.g. termite, structural, required repairs, etc)
6) any leases (if tenants reside on the premises)
The pamphlet “For Your Protection: Get a Home Inspection” is required ONLY for ___.
FHA loans
Which pamphlet emphasizes the difference between an appraisal and a home inspection?
For Your Protection: Get a Home Inspection
The pamphlet “For Your Protection: Get a Home Inspection” emphasizes the difference between ___ and ___.
an appraisal and a home inspection
In the real estate contract, the ___ usually reserves the right to make a final inspection shortly before the closing takes place
buyer
In the real estate contract, the buyer usually reserves the right to make a(n) ____ shortly before the closing takes place
final inspection
In the real estate contract, the buyer usually reserves the right to make a final inspection shortly before ___ takes place
closing
Also called a walk-through
Final inspection
Shortly before closing, the buyer accompanied by the licensee will make a(n) ___ to verify that necessary repairs have been made, the property has been well maintained, all fixtures are in place, and no unauthorized removal or alteration of any part of the improvements has taken place.
final inspection
The final inspection is NOT an opportunity to…
reopen negotiations
The ___ specifies who will pay for the survey
sales contract
Typically, the ___ indicates the location of all buildings, driveways, fences, and other improvements located on the premises.
Survey
The ___ also notes any improvements located on adjoining property that may enroach on the premises being bought.
Survey
The ___ should set out, in full, any existing easements and enroachments.
survey
The survey should set out, in full, any existing ___ and ___
easements and enroachments
A survey is frequently required by ___
Lenders
Relying on old ___ is not a good idea, and the property should be ___, whether or not the title company or lender it.
Survey
Resurveyed
A current ___ confirms that the property purchased is exactly what the buyer wants.
Survey
Both the buyer and seller, both accompanied by their attorneys, will want to inspect the ___ to make sure that all monies involved in the transaction have been accounted for properly.
closing statement
Licensees may discuss with clients the approximate expenses involved in closing at the time the ___ or ___ is entered into but NOT later than the time when the ___ is signed.
listing agreement or buyer agency agreement
sales contract
Lenders require ___ in the event any “clouds” on the title (encumbrances on the real estate or claims on the title) should come up during the course of ownership
Title insurance
___ is not issued until it is clear that such encumbrances from the past are unlikely
Title insurance
Title insurance is not issued until it is clear that ___ from the past are unlikely
encumbrances
a major goal of title procedures is for the new owner to obtain a clear and valid “___”
Owner’s title policy
Which policy comes as close as any document can to providing evidence of ownership of a property that is unencumbered by any past liens or potential claims?
Owner’s title policy
as a first step toward a new owner’s title policy, before closing and establishment of the new owner’s title, the seller is usually required to produce a current ___ or ___ from the title insurance company
abstract of title
or
title commitment
When a(n) ___ is used, the purchaser’s attorney examines it and issues an opinion of title.
Abstract of title
when an abstract of title is used, the purchaser’s attorney examines it and issues a(n) ___.
opinion of title
The ___ issued by the purchaser’s attorney is a statement of the status of the seller’s title
opinion of title
the opinion of title issued by the purchaser’s attorney is a statement of…
the status of the seller’s title
The ___ issued by the purchaser’s attorney discloses all liens, encumbrances, easements, conditions, or restrictions that appear on the record and to which the seller’s title is subject
opinion of title
the date when the sale is actually completed
the date of delivery of the deed
On the date when the sale is actually completed, the buyer has a(n) ___ or a(n) ___ that was issued several days or weeks before the closing.
abstract of title
or
title commitment
How many searches of public records are there normally?
Two
The first search of public records shows the ___ on the date of the first search, and is usually paid for by the ___.
status of the seller’s title
seller pays
The second search of public records (bring-down) is made ___ and is generally paid for by the ___.
Made after closing
Purchaser pays
During the second search (bring-down), the seller may be required to execute a(n) ___.
Affidavit of title
The ___ promises that no unrecorded deeds or contracts have been made, no repairs or improvements have gone unpaid, and no defects in the title have arisen that the seller knows of.
Affidavit of title
The ___ affirms that the seller is in possession of the premises
Affidavit of title
In some areas, an affidavit of title is required before the ___ will issue a(n) ___ to the buyer
title insurance company will issue an owner’s policy
The affidavit of title gives the title insurance company the right to ___ if the statements in the affidavit are incorrect
sue the seller
In IL, the title insurance agent or independent escrowee acting as the closing agent may not make disbursements at closing when the amounts held for disbursement include funds from any single party in excess of $50,000, unless those funds (called good funds) are wired funds unconditionally held by and credited to the ___.
Closing agent
In IL, the title insurance agent or independent escrowee acting as the closing agent may not make disbursements at closing when the amounts held for disbursement include funds from any single party in excess of $50,000, unless those funds (called good funds), are in the form of a check issued by ___, ___, or ___.
State of IL
The USA
political subdivision of IL or the USA
In IL, the title insurance agent or independent escrowee acting as the closing agent may not make disbursements at closing when the amounts held for disbursement include funds from any single party in excess of $50,000, unless those funds (called good funds) have been received by the ___ and are finally settled and credited to the account of the ___
closing agent
closing agent
In IL, if a party to the transaction brings funds to the table for closing, the good funds would include a personal check not exceeding $___ as long as there are reasonable grounds to believe that sufficient funds are available to back the check
$5,000
In IL, cash monies up to $____ can be provided at closing by a party and be considered good funds
$49,999.99
In IL, cash monies LESS than $50,000 can be provided at closing by a party and be considered ___
good funds
IL, cashier’s checks or certified checks drawn on or issued by a financial institution chartered by any state in the USA up to $49,999.999 will be considered ___
good funds
It is always best to check with the ___ to see what form they will allow funds to appear at closing.
title company
Title companies are often reluctant to take ___ of any amount
personal checks
In IL, a subsequent amendment to the Title Insurance Act clarified that money coming from a brokerage need not be wire transferred UNLESS…
it is greater than $50,000
Whether the purchaser pays cash or obtains a new loan to purchase the property, the seller’s ___ is paid in full and satisfied on record
Existing loan
In a transaction in which the buyer assumes the seller’s existing mortgage loan, the buyer will want to know the ___ as of the closing date
exact balance of the loan
In some areas, it is customary for the buyer to obtain a(n) ___ from the lender that certifies the amount owed on the mortgage loan, the interest rate, and the last interest payment made.
Mortgage reduction certificate
Licensees often assist in ___ as part of their service to customers
pre-closing arrangements
In some states, licensees are required to advise the parties of the ___ involved in closing when a real estate sales contract is signed.
approximate expenses
In some states, licensees have a statutory duty to ___ and ___ closing activities
coordinate and supervise
Aside from state laws, a licensee without a specific role in the closing may still be the person with the ___, which is why many licensees feel it is part of their fiduciary duty to be present at a face-to-face closing
most knowledge of the transaction
