Public Records, Titles, and Closings

Question 1

public records

Answer 1

county’s collection of documents relating to real estate

Question 2

caveat emptor

Answer 2

latin phrase: “let the buyer beware”

a buyer purchases the property as-is, without warranties of title or of condition of the property

Question 3

constructive notice

Answer 3

notice given to the world by recorded documents

Question 4

actual notice

Answer 4

written or spoken instructions given to the public as notice

Question 5

direct knowledge

Answer 5

when an individual has actual notice of any information

Question 6

suit to quiet title

Answer 6

court action intended to establish or settle the title to a particular property, especially when there is a cloud on the title

Question 7

evidence of title

Answer 7

documentary proof that the seller of property is in fact the owner and has good title to the property

Question 8

four forms of title evidence

Answer 8

1. abstract of title and attorney’s opinion
2. title insurance policy
3. Torrens certificate
4. certificate of title

Question 9

abstract of title

Answer 9

a brief history of a piece of land, and it is used to determine whether or not there is any kind of claim against a property

Question 10

attorney’s opinion of title

Answer 10

a written statement by an attorney regarding the identity of all current title owners, lien holders, and possible claimants of a particular land

Question 11

title insurance policy

Answer 11

a policy meant to protect home buyers and mortgage lenders from damages or financial losses caused by a bad title due to title defects

Question 12

Torrens certificate

Answer 12

not used in NJ

a document that assigns unassailable ownership of real property to the registered titleholder

Question 13

certificate of title

Answer 13

an official state or municipal-issued document that identifies the owner(s) of personal or real property

Question 14

marketable title

Answer 14

title that is free from significant defects

Question 15

Real Estate Settlement Procedures Act (RESPA)

Answer 15

requires lenders, mortgage brokers, or servicers of home loans to provide borrowers with pertinent and timely disclosures regarding the nature and costs of the real estate settlement process

Question 16

affidavit

Answer 16

written statement sworn to before an authorized officer

Question 17

payoff statement

Answer 17

a statement prepared by a lender providing a payoff amount for prepayment on a mortgage

Question 18

escrow closing

Answer 18

closing of a transaction through escrow agent

rarely used in NJ

Question 19

closing statement

Answer 19

detailed cash accounting of a real estate transaction showing all cash received, and charges and credits made, and all cash paid out

Question 20

debit

Answer 20

a charge

Question 21

credit

Answer 21

an amount entered in a parties favor

Question 22

realty transfer fee

Answer 22

seller must pay 1% of the sales price upon recording the deed

Question 23

origination fee

Answer 23

an upfront fee charged by a lender to process a new loan application

Question 24

assumption fee

Answer 24

the charge paid by the buyer who assumes a mortgage on a property

Question 25

reserve

Answer 25

sum of money set aside to be used for a particular purpose

Question 26

prorations

Answer 26

credits between the buyer and seller at closing (interest, taxes, utility bills)

Question 27

arrears

Answer 27

payment after the service has been rendered

Question 28

accrued items

Answer 28

items to be prorated that are owed by seller but will be paid by buyer (i.e., interest on mortgage loan, water bills)

Question 29

prepaid items

Answer 29

payments made in advance of the monies due to obtain your new loan

Question 30

three methods of calculating prorations

Answer 30

1. yearly change is divided by 360-day year
2. monthly charges divided by actual number of days in the month of closing
3. yearly change is divided by 365 to determine daily charge

Question 31

are you required to record your real estate ownership history?

Answer 31

no

Question 32

cloud on title

Answer 32

a claim or encumbrance that affects the ownership of a property.

Question 33

is a deed proof of title?

Answer 33

not always, it depends on the type of deed and if the deed conveys interest in property

Question 34

what two closings happen at the end of sales transactions?

Answer 34

1. closing of buyer’s loan
2. closing of the sale

Question 35

what might a lender require before closing to protect their loan?

Answer 35

1. insurance policy
2. fire/hazard insurance
3. certificate of occupancy (if required)
4. inspection reports
5. establishment of reserve, escrow accounts
6. representation of their own attorney

Question 36

kickback

Answer 36

illegal payment IRS doesn’t see

Question 37

exit tax

Answer 37

a prepayment of the estimated tax you owe on the sale of your property

Question 38

prepaid items

Answer 38

credit to the seller

Question 39

Other expenses involved in real estate transactions

Answer 39

1. broker’s commission
2. attorney’s fees
3. recording expenses
4. transfer tax
5. title expenses
6. loan fee
7. tax reserves and insurance reserves

Question 40

what is included in a Closing Disclosure?

Answer 40

1.costs to close
2. itemized closing costs
3. analysis of any changes from original loan estimate
4.disclosures
5. summary of loan payment

Question 41

when does Closing Disclosure need to be provided?

Answer 41

at least three business days before closing; minimum seven days between loan estimate and closing

Question 42

Federal Flood Insurance Program

Answer 42

federally regulated lenders must require flood insurance on any property secured by mortgage in ares of high risk for flooding