Closing Real Estate Transactions

Question 1

Does death or incapacity of the seller terminate escrow?

Answer 1

Not if the seller has already deposited the deed.

Question 2

Who licenses escrow agents?

Answer 2

Washington Department of Financial Institutions. Only corporations may be licensed - individuals are licensed as “escrow officers” to be employed by an escrow agent.

Question 3

Can real estate agents act as escrow offiers?

Answer 3

Yes, in their own transactions (agent or party) and cannot charge a fee. They are exempt from licensing in this case.

Question 4

What is a roundtable closing?

Answer 4

In some states all parties meet instead of involving escrow to exchange documents and the agent is present to collect commission.

Question 5

What is a settlement statement?

Answer 5

Part of the closing disclosures, required by the Real Estate Settlement Procedures Act. Detailed accounting for the transaction listing each party’s debits and credit and the amount that they will pay/receive at closing. Also called a closing statement.

Question 6

Who pays recording fees?

Answer 6

The person who benefits from the recording of the document (new deed paid by buyer, deed of reconveyance paid by seller)

Question 7

Is the closing agent required to make tax reportings?

Answer 7

Yes:

1099-S - reporting gross sale proceeds (if they fail, it’s the real estate agent’s responsibility)

8300 - Report having received more than 10k in cash in a transaction.

Question 8

What are the goals of RESPA?

Answer 8

1) provide buyers with information about closing costs

2) prevent kickbacks

Question 9

What transactions does RESPA cover?

Answer 9

Loan secured by mortgage or deed for residential property (4 or fewer units), condos, or lot with mobile home

AND

The lender is federally regulated, has federally insured accounts, or sells to Fannie, Freddie or Ginnie

DOES NOT APPLY to seller financing or commercial

Question 10

What does RESPA require?

Answer 10

Disclosure of:
- Required providers
- Referrals

• Cannot collect excess impounds
• No kickbacks, payments for unearned fees, or charges for preparing required disclosures

SELLER MAY NOT REQUIRE Buyer to use specific title company

Question 11

Who requires loan cost disclosures?

Answer 11

RESPA and TILA. Loan estimate within three days of an application, and three days before closing the closing disclosure form.