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27 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Escrow |
Process were a neutral third-party acts as the closing agent for the buyer and the seller |
Pg. 297 Escrow |
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Legal Requirements for a Valid Escrow |
1. Must be a binding contract between the seller(grantor) and buyer(grantee) 2. Must be the conditional delivery of transfer instruments & monies to a neutral 3rd party.Confidentiality |
Pg. 297 |
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How is Confidentiality of Escrow achieved |
Only principal and their agents are entitled to see the escrow instructions for mutual items in the transaction. Sale price, down payment, & terms of sale. Sellers profit and buyers financing is kept confidential to them personally. |
Pg.298 |
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Interpleader action |
If the escrow holder receives conflicting instructions from the principals the escrow officer simply refuses to proceed until the parties settle their differences. this legal action is called interpleader action |
Pg 298 |
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Status of the escrow holder |
Escrow is a limited agency before a real estate sale is recorded. Escrow officer is the dual agent for the buyer and the seller. after the deed is recorded the escrow officer becomes the individual agent for each party. |
Pg298 |
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Business that can handle escrows without an escrow license |
Title insurance companies. Bank trust companies. Savings and loan institutions & Insurance company. As well as Real estate brokers performing escrow services for a client and attorneys with a client relationship to the transaction. |
Pg 299 |
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Who decides which escrow company to use? |
Selection is negotiated between the buyer and the seller. |
Pg 299 |
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Who pays the escrow fee? |
Escrow fee is negotiated between the buyer and the seller it can be paid for by the buyer or the seller or split between both |
Pg 299 |
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Services provided by escrow holders |
For a fee the escrow holder carefully collects, prepares, and safeguards the instructions, documents, and monies required to close a transaction. Upon receipt of written instructions from all parties the instructions are compared to determine if the parties are in mutual agreement. An escrow officer can do no more or no less than the instructions dictate. |
Pg 299 |
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Services performed by escrow company |
1. Prepare buyers and sellers escrow instructions. 2. Order preliminary title reports to review for items such as unrecorded liens or judgments 3. Request demand for payoff for the sellers loan from the lending institution 4. Collect structural pest control report and notice of work completed 5.Collect required fire insurance policy 6. Balances the accounting details including adjustments and prorations of the taxes, interest, insurance, and assessment and rents 7. Collect the balance of money is required to close the transaction Verifies the appropriate documents are recorded and audits the escrow file then disperses the monies, issues itemize closing statements to all parties, and orders title insurance policy
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Pg300 |
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How is escrow terminated |
By completion of the sale or completion of the loan process for refinancing. May be Terminated by mutual agreement of the parties. Or if the time limit has expired |
Pg 301 |
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What do title insurance companies do? |
1. Search and gather public records relating to the legal title of real property 2. Examine and interpret the title records that have been gathered. 3. Ensuring owner or lender against financial loss resulting from certain and reported defects in the title |
Pg 305 |
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Who pays for the title insurance |
It is a negotiable item between the buyer and the seller. |
308 |
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Standar coverage policy |
CLTA |
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Closing costs |
Negotiable between buyer and seller rule of thumb is 3% of sales price |
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Buyers non recurring closing costs |
Loan origination fee - quoted as a % of loan amount Appraisal fee - typically $350-450 Credit report fee - $40-60 Structural pest control inspection fee - $75-125 Tax service fee - $50-80 Recording fees $10-15 Notary fees - set by law Assumption fee - if buyer is assuming sellers loan Title and escrow fees |
310-311 |
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Recurring closing costs for buyer |
Hazard insurance Tax proration Tax and insurance reserves (impound account) Interest due before the first loan payment |
311 |
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Closing costs seller |
Transfer tax - $1.10 per 1000 500,000/ 1000 = 500 x 1.10 = $550 tax Prepayment penalty - paying off loan before required due date Brokerage commission - percentage of sales price Discount points - Title and escrow fees Natural hazard disclosure fees |
312-313 |
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Documentary transfer tax |
.55 cents for every $500 of value transferred. EX 510,000 / 500 = 510 x .55 = $561 transfer tax |
Pg 304 |
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Title search methods |
Courthouse search- A title person goes to the county courthouse and searches through public records pertaining to a particular property under examination. Title plant- A condensed courthouse where records affecting real property or copied and filed for future reference |
Pg305 |
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Chain of title |
In unbroken history of all title transfers beginning with the document originally transferring title from the government to private ownership and ending with document vesting title in the current owner |
Pg 305 |
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Preliminary title report |
Report listing the legal description of the property, status of property taxes and special assessments, and various encumbrances against the property |
Pg 305 |
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Abstractors |
Specialists who search and compile courthouse records to publish findings on a specific parcel of land |
306 |
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Types of title insurance policy : Standard owners policy |
Insurance the owner for the amount of the purchase price |
306 |
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Types of title insurance policy : Standard lender’s policy |
Ensures the lender for the amount of the loan |
306 |
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Types of title insurance policy: Standard joint protection policy |
Co- insures the owner and lender under one policy |
306 |
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Extended coverage policy (ALTA) |
Policy that requires the title company to make a physical inspection of the property and ensure against certain unrecorded title risks excluded under standard policy |
307 |
