Unit 5: NC Property Taxes and Settlement

Question 0

Debit

Answer 0

Amount charged to a party to pay a bill

Question 1

Who pays pest inspection for buyer with VA loan?

Answer 1

Seller

Question 2

Trust account

Answer 2

Place where broker holds money belonging to other parties

Question 3

Excise tax

Answer 3

Amount of $1 per $500 of purchase price charged when a deed is recorded

Question 4

Credit

Answer 4

Amount received by a party it pay a bill

Question 5

Closing

Answer 5

Final settlement crested by the terms of the Offer to Purchase and Contract

Question 6

Recording

Answer 6

Creates constructive notice of the contents of the document

Question 7

Proration

Answer 7

Dividing expenses between the buyer and seller based on ownership periods

Question 8

Lender/escrow accounts

Answer 8

Place where lender holds borrower’s funds to pay bills at a later time

Buyer always pays to start account

Question 9

Settlement statement

Answer 9

Summary of financial part of a closing for omen party to the transaction

Question 10

Double entry debits and credits

Answer 10

Always equal in amounts

Question 11

Loan discount points

Answer 11

Charged by lender in exchange for lower interest rates . Increase lenders yield on loan

Question 12

First deed of trust

Answer 12

Creates a financing lien and has highest priority

Question 13

Loan origination fee

Answer 13

Administrative fee charged by lender to set up loan

Question 14

Conventional loan

Answer 14

Neither insured or guarantee by government

Question 15

Second deed of trust

Answer 15

Loan created with a lower lien priority such as seller financing

Question 16

Recording of deed of trust

Answer 16

Buyer pays

Question 17

Tenant security deposits

Answer 17

Debit seller, credit buyer

Question 18

Unpaid taxes from previous year

Answer 18

Seller pays

Question 19

Loan assumption entry

Answer 19

Debit seller, credit buyer

Question 20

Annual interest

Answer 20

NOT part of every proration

Question 21

Recording of warranty deed

Answer 21

Buyer pays

Question 22

Buyer’s earnest money

Answer 22

Credit to buyer

Question 23

Due diligence fee

Answer 23

Debit seller, credit buyer

Question 24

Tenant security deposit

Answer 24

Debit seller full amount, credit buyer full amount

Question 25

Excise tax

Answer 25

Total sales price / $500

NOT printed on the sakes contract, it’s printed on the deed.

Paid by seller (debit seller)

Always a whole dollar amount

Question 26

Pest inspection on VA loan

Answer 26

Debit seller

Question 27

NC law: assessed value must equal

Answer 27

Market value

Question 28

NC real property taxes

Answer 28

Attach to property as of January 1

No penalties if paid by January 5th

Question 29

NC machinery act

Answer 29

Governs all taxation including ad velorum taxes

States that at time of assessment, assessed value must equal market value

Question 30

Real property assessments

Answer 30

Every 8 years (Octennial reappraisal)

Horizontal adjustment: every 4 years after octennial adjustment, city or county may uniformly adjust property up or down across the board

Question 31

Tax rates

Answer 31

Can be adjusted annually to meet budget needs

In NC, tax rate/ 100

Question 32

Good funds settlement act

Answer 32

Requires the deed and deed of trust be recorded before funds are dispersed

Question 33

NC Rules

Answer 33

1) seller owns day of closing settlement
2) use 360 days in a year , 30 days in every month
3) never prorate : tax reserve balance, security deposits, mortgage payment due for month of settlement
4) items typically prorated; current years taxes, interest on assumed loan,

Question 34

Proration formula

Answer 34

Total bill/ days in billing period x days owed

Question 35

No single entry CREDITS for seller

Answer 35

Only debits

Question 36

Double entry items for closing worksheet

Answer 36

1) Selling price: debit buyer, credit seller
2) Due diligence fee : credit buyer, Debit seller
3) paid real estate taxes : debit buyer, credit seller