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Title & Escrow – Questions With Correct Solutions
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Title & Escrow – Questions With Correct Solutions
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Title & Escrow – Questions With Correct SolutionsTitle & Escrow Correct Ans - Escrow and title insurance typically go
hand-in-hand together in real estate sales or financing types of
transactions. Many times, a title insurance company will offer escrow
services as well, or escrow can be offered by a separate company dedicated
solely to escrow functions. Escrow is a designated and neutral third party
firm that collects money and paperwork from all sides in the real estate
transaction prior to making any necessary payoffs to the sellers and
existing lenders concurrently at the closing and clear title insurance
coverage.
What is title insurance? Correct Ans - It is a contract obligation
where one party agrees to reimburse, indemnify, or protect against any
potential financial losses or damages to the subject property which may
occur under the designated terms and provisions included within the title
insurance contract. differs from life or casualty insurance such as car or
health insurance, which usually insure against future events such as an
automobile accident or health problems in one's older years. Insures
against past events or histories
Title insurance, in turn, typically insures against past events or histories
such as problems associated with the following issues: Correct Ans -
"Chain of title" ownership or transfer histories
Zoning and usage issues
Improper easements and encroachments such as a neighbor's fence being
improperly built on a person's yard
Mistakes such an incorrect property addresses
Forgery and fraud where a previous seller's signature was signed by
someone else without his or her permission
The two main types of title insurance options available to property owners
nationwide: Correct Ans - Standard Coverage Policy
Extended Coverage Policy
Standard Coverage Policy: Correct Ans - It is usually the less
expensive title insurance option primarily since it offers fewer insurance
coverage benefits. The insurance risks are usually limited to certain types
of off-record risks such as fraud in the chain of title, defective past
,recordings, and the competency issues of past owners. Mechanic's liens, tax
liens, judgments, and other defects against the property that a basic search
of public records may uncover are generally covered by this policies.
Extended Coverage Policy: Correct Ans - This more expensive and
extensive type of title insurance policy provides the same insurance
coverage benefits as a standard policy while also offering protection
against past events or histories that aren't as easy to discover without
physical inspections or detailed verbal inquiries such as unrecorded
mechanic's liens, leases, or seller-financed wraparound mortgages or land
contracts that can "cloud" up the clear title history with questionable
ownership interests still in place.
insures against many of the items excluded in the standard policy. Lenders
require their mortgagee policies to be extended coverage policies.
Escrow Correct Ans - Escrow officers and firms can interact the
most with parties or businesses as compared with any other people
involved in the transaction, including the agents and principals.
some of the basic functions of an escrow officer involved in a residential or
commercial real estate sales transaction: Correct Ans - Work with
all parties in the transactions including buyer, seller, and agents
Collects the necessary earnest money deposits
Orders the preliminary title report and examination for the subject
property
Orders the appropriate title insurance requested by the parties
Coordinates the hazard insurance coverage with the home insurance agent
Gathers the third party inspection reports (e.g., termite and pest, home
inspection)
Orders the demands for payoff from the existing lender(s) and owners
Requests copies of the buyer's new vesting information to be placed onto
title at the closing (i.e., John Smith, a single man holds title 100%)
Creates one, two, or more updated versions of escrow instructions that are
primarily based upon the submitted and signed purchase agreements,
counteroffers, and any subsequent addendums
Gather all tentative closing cost information from the new lender, buyer,
seller, listing agent, buyer's agent, and any third parties with unpaid bills
such as home inspectors, pest control, and appraisers
,Prepare all closing documents
Complete the closing concurrently with the payoff of any existing debt on
the subject property, and assist with the transfer of title to the new buyers
Collect and disburse all monies owed
Complete all post-closing details
title closing Correct Ans - is the culmination of the real estate
transaction.
At the title closing: Correct Ans - The buyer completes his or her
financing arrangements (referred to as closing the loan).
The seller transfers the title.
Both the buyer and seller pay the necessary taxes, fees and other charges.
Who Attends Title Closing Correct Ans - Buyer - Pays for the
property and receives clear title.
Seller - Conveys the property and receives payment.
Closing agent - Prepares all the documents that need to be signed at the
closing, including the actual settlement statements that show all the debits
and credits assigned to the buyer and seller in the transaction.
Others who may attend the closing are: Correct Ans - Attorneys for
the parties - Examine the documents to ensure that the best interests of the
clients are being met
Lender representative - Examines documents and makes sure the property
getting the loan has clear title
Real estate agent - Collects commission
Title company representative - Reviews documents and answers questions
about the title
Closing Documents Correct Ans - Deed
Survey
Other Documents
Deed Correct Ans - The deed is the most important document at
closing, since it transfers the property to the purchaser. The deed is usually
prepared by the seller's attorney, who uses the old deed as a template to
prepare the new one.
, Survey Correct Ans - The purchaser, purchaser's lender, or title
company may require a survey to verify the location and size of the
property. The survey also identifies any easements, encroachments, or
floodplain hazard.
Other Documents Correct Ans - Broker's commission statement
Certificate of occupancy
Flood insurance policy
Homeowner's insurance
Lead-based paint disclosure
Lease
Lien waivers
Mortgage documents
Property inspection
Settlement statement
Title insurance policy
Where Held Correct Ans - The sale contract usually specifies where
the closing will be held. It can be at any one of a number of office locations:
Title company
Lender
Attorney
Closing agent
County recorder
Broker's Role Correct Ans - Facilitate a closing during the period of
the agreement sale and closing date.
Involved in ordering inspections, surveys or appraisals.
Check the progress and activities
Do a walk through with buyers
Collect commission check- After closing, the broker will deposit the check
into an escrow account and disburse the money to the appropriate
cooperating agents.
After the closing, the broker, or whoever acted as the closing agent, has the
task of reporting the transaction to the IRS.
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