RP UNIT14 Flashcards
What is the primary purpose of closing in a real estate transaction?
The point at which ownership of a property is transferred in exchange for the payment of the selling price.
What are the buyer’s concerns during the closing process?
Buyer’s concerns include:
* Assurance of good title delivery
* Property condition verification
* Final property inspection results
* Survey information
* Title evidence compliance
What should be examined in the buyer’s final property inspection?
The final inspection should indicate:
* Necessary repairs made
* Property is well maintained
* Fixtures and personal property left by seller are in place
* No unauthorized removals or alterations
What does the survey provide information about?
The exact size and location of the property.
What is typically required of the seller regarding title evidence?
The seller is usually required to show proof of ownership by producing current title evidence.
What are the seller’s concerns during the closing process?
Seller’s concerns include:
* Assurance that the buyer has obtained financing
* Assurance that the buyer has sufficient funds to complete the sale
What is the role of the real estate professional at closing?
The role varies depending on local practice, often providing guidance and assistance.
What does the lender typically require at closing to protect its security interest?
Lender requirements may include:
* Title insurance policy
* Fire and hazard insurance policy
* Survey
* Inspection reports
* Certificate of occupancy
* Reserve or escrow account for payments
* Representation by its own attorney
What information does Form 1099-S contain?
Form 1099-S contains:
* Seller’s Social Security number
* Sales price
* Amount of property tax reimbursed to the seller by the buyer
What is a face-to-face closing?
A gathering of the parties interested in the real estate transaction to execute the promises made in the sales contract.
Where can face-to-face closings be held?
Face-to-face closings may be held at:
* Title insurance company
* Lending institution
* Attorney’s office
* Broker’s office
* County recorder’s office
* Escrow company
Who typically attends a closing?
Attendees may include:
* Buyer
* Seller
* Real estate licensees
* Attorneys for both parties
* Representatives of lending institutions
* Title insurance representatives
What is the purpose of an escrow agent?
To act as a disinterested third party coordinating the closing activities.
What must the seller deposit with the escrow agent before closing?
The seller must deposit:
* The deed
* Title evidence
* Existing hazard insurance policies
* Mortgage reduction certificate
* Affidavits of title
* Payoff statement
* Other necessary documents
What must the buyer deposit with the escrow agent before closing?
The buyer must deposit:
* Balance of cash needed
* Loan documents
* Proof of hazard insurance
* Other necessary documents
What does RESPA stand for?
Real Estate Settlement Procedures Act.
What are the main goals of RESPA?
RESPA aims to:
* Provide timely information on settlement costs
* Eliminate kickbacks and referral fees
* Prohibit excessive escrow account deposits
What types of loans are subject to RESPA requirements?
Loans subject to RESPA include:
* Federally chartered loans
* FHA-insured loans
* VA-guaranteed loans
* Loans administered by HUD
* Loans intended for Fannie Mae, Ginnie Mae, or Freddie Mac
What are affiliated business arrangements (ABAs) under RESPA?
ABAs allow affiliated firms to offer services if:
* The relationship is disclosed
* Consumers can obtain services elsewhere
* No fees are exchanged for referrals
What is the purpose of the TILA-RESPA Integrated Disclosure Rule?
To require two forms: Loan Estimate and Closing Disclosure for transactions originating on or after October 3, 2015.
What must happen after a Loan Estimate is issued?
The lender is committed to making the loan on the indicated terms.
What is a debit in a closing statement?
A charge (an expense).
What is a credit in a closing statement?
An amount entered in a person’s favor.
What are some common expenses included in closing statements?
Common expenses include:
* Broker’s commission
* Attorney’s fees
* Recording expenses
* Transfer tax
* Title expenses
* Loan fees
* Appraisal fee
* Survey fee
What is the general guideline for prorating real estate taxes?
In most states, the seller owns the property on the day of closing.
How is the arithmetic of prorating determined?
Factors include:
* Nature of the item being prorated
* Whether it is accrued or prepaid
* Required calculations
