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71 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Which one of the following statements correctly describes the manner in which taxes are prorated at closing?
The seller must be given a credit for pre-paid taxes. No pro-ration is made until the tax bill arrives. |
II only I only Both I and II Neither I nor II |
I only |
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An instrument or document which protects the insured parties (subject to specific exceptions) against defects in the examination of the title record and against hidden risks, such as forgeries, is called |
title insurance policy. a chain of title. abstract of title. certification of title. |
title insurance policy. |
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When prorating California real property taxes in a closing statement, what date is used as the beginning of the tax year? |
July 1 January 1 May 31 November 15 |
July 1 |
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Which of the following statements about closings is true? The total of the debit column on the seller's statement must be identical to the total of the credit column on the purchaser's statement. The closing date and the possession date must be the same day. |
Both I and II II only I only Neither I nor II |
Neither I nor II |
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An escrow can be terminated by which of the following? |
Incapacity or death of either party Mutual consent of the parties Revocation by the listing broker None of the above |
Mutual consent of the parties |
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If an escrow agent is specified in a contract signed by buyer and seller, the |
escrow agent will select the closing date. real estate broker may present the documents to open the escrow. seller receives the earnest money deposit as soon as the sales agreement and monies are received by the escrow agent. |
real estate broker may present the documents to open the escrow. |
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The real estate broker's commission is usually shown as a debit to the seller on the closing statement. credited to the buyer on the closing statement. |
II only Both I and II I only Neither I nor II |
I only |
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The premium for a title insurance policy purchased by the seller would appear as a debit to the seller on the closing statement. credit to the purchaser on the closing statement. |
II only Both I and II I only Neither I nor II |
I only |
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One of the essential requirements for a valid escrow is a binding contract. This may be: |
a lease agreement. an exchange agreement. an option agreement. All of the above |
All of the above |
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The cost of an owner's title insurance policy is based primarily on |
age of property. cost of property. the number of covenants in the warranty deed. All of the above. |
cost of property. |
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Short rate refers to |
insurance. property tax bill. interest. loan documents. |
insurance. |
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A proper escrow, once established, should NOT be |
managed by an escrow agent. terminated for any reason. voidable at option of buyer and seller. subject to the control of any one interested party. |
subject to the control of any one interested party. |
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On the closing documents the existing loan payoff is entered as a |
credit to the buyer. debit to the seller. debit to the buyer. credit to the seller. |
debit to the seller. |
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In a certain county, the Documentary Transfer Tax is $.55 per $500, or fraction thereof, of equity transferred. A property sold for $150,000, $125,000 being subject to transfer tax. The amount of tax is most nearly |
$68. $138. $152. $252. |
$138. |
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In order to determine the condition of the title, a purchaser should secure |
a survey from a licensed surveyor. a certificate of no defense from the seller. a title search from a title insurance company. an estoppel statement from the lender. |
a title search from a title insurance company. |
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The purpose of a closing statement is |
a determination of the amount of cash to be paid by the buyer at closing and the amount of cash to be received by the seller at closing. a record of pro-rations between seller and buyer. to assess all charges equally between the parties. a cash reconciliation statement to be sure the escrow agent or broker is not paying out more cash than he/she has received. |
a determination of the amount of cash to be paid by the buyer at closing and the amount of cash to be received by the seller at closing. |
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Under FIRPTA, an escrow officer must |
collect and transfer to the IRS, within 10 days, 10% of the net proceeds of the sale of real property by persons not U.S. citizens if there is no exemption. collect 15% of the net proceeds of a sale of agricultural property if the crops are being exported to a foreign county. advise a foreign purchaser of real property in the United States that there is a 10% of the sales price Real Property Purchase Surcharge. advise the parties that an attorney must close the transaction. |
collect and transfer to the IRS, within 10 days, 10% of the net proceeds of the sale of real property by persons not U.S. citizens if there is no exemption. |
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In financing a sale of real property, a purchase money mortgage is given back to the seller. Where is this shown on the closing statement? |
Credit to the buyer Cash paid out at closing Debit to the buyer Debit to the buyer and credit to the seller |
Credit to the buyer |
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When transactions involving the sale of real estate are placed in escrow, this means |
they are completed in secrecy. a designated agent, agreed to by the parties, holds the necessary documents until the terms are met. the broker is no longer involved. the broker holds the papers until the recordation of title is completed. |
a designated agent, agreed to by the parties, holds the necessary documents until the terms are met. |
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The Foreign Investment in Real Property Tax Act (FIRPTA) applies to |
the purchase of property in a foreign country. the sale of real property by a non-resident alien. the purchase of property by a foreigner. the proceeds on the sale of property owned in a foreign country. |
the sale of real property by a non-resident alien. |
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On December 10 a property was closed in escrow. The assessed valuation of the property was $25,000. The tax rate for real property was $25 per thousand. The current taxes have been paid. The seller is responsible for the day of closing. What will the buyer be charged for his portion of the taxes? |
$285. $289. $346. $638. |
$346. |
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Edward sold his property to Linda with a possession and closing date of August 10th. Edward has not yet received his current year's tax notice, but last year's taxes were $847.00. Which of the following statements about this situation is correct? |
Edward should be charged the estimated taxes from July 1st to August 10th and Linda should be credit with that amount. There is no way to attempt a tax pro-ration until the actual bill arrives. The taxes will appear as a debit on Linda's closing statement and a credit on Edward's closing statement. Linda should be given a debit for the estimated taxes between January 1st and August 10th. |
Edward should be charged the estimated taxes from July 1st to August 10th and Linda should be credit with that amount. |
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In order to determine boundaries of a property, one should obtain |
a survey. a court order. a title policy. an abstract. |
a survey. |
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An escrow is |
controlled by a licensed broker, acting as agent of the seller. voidable at the option of either the buyer or seller. beyond the control of any interested party by themselves. voidable at the seller's option only. |
beyond the control of any interested party by themselves. |
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All of the following are usually prorated in the closing statement EXCEPT |
insurance. rents. taxes. a sellers unsecured loan. |
a sellers unsecured loan. |
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The Escrow Act is found in the |
Civil Code Business Code Administrative Code Financial Code |
Financial Code |
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Which of the following parties usually pays for the owners title policy? |
The buyers agent The buyer The listing agent The seller |
The seller |
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Which statement below does NOT accurately reflect the duties of escrow agents? |
They are to act impartially for both the buyer and seller. They must act as fiduciaries until escrow is closed. In reviewing legal documents, they are to provide any missing clauses. They must follow escrow instructions. |
In reviewing legal documents, they are to provide any missing clauses. |
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An escrow company acts as
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an agent for both buyer and seller. a principal. a holder in due course. an insurer. |
an agent for both buyer and seller. |
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An escrow agent can legally (check all that apply) |
request funding of the buyers loan. change a brokers commission. record all of the necessary documents at the closing of escrow. |
request funding of the buyers loan. record all of the necessary documents at the closing of escrow. |
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A contract for the sale of real property includes the sale of certain removable items, such as refrigerators and furniture. Upon payment and delivery of the deed, the seller should also deliver |
a chattel mortgage. an estoppel certificate. a satisfaction piece. a bill of sale. |
a bill of sale. |
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When a deed is delivered into escrow by the seller |
title remains with the seller until escrow conditions have been met. title immediately vests in the buyer. the escrow officer must record the deed the same day None of the above. |
title remains with the seller until escrow conditions have been met. |
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The assumption of a sellers mortgage appears on the closing statement as a credit to the seller. credit to the buyer. |
II only Both I and II I only Neither I nor II |
II only |
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Jones sold real property to Smith and each fully performed his duties and obligations as stated in the escrow instructions. Jones died prior to the recordation of the deed. The escrow is |
void, as death always terminates an escrow. invalid and the heirs of Jones may ask the court to set aside the contract. valid and Smith is entitled to demand that the transaction close and the deed be recorded as provided in the escrow instructions. voidable by Jones' heirs. |
valid and Smith is entitled to demand that the transaction close and the deed be recorded as provided in the escrow instructions. |
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If the buyer is unable to comply with the escrow instructions by depositing all of the required funds, the escrow can be closed if the broker provides the short funds, without informing the seller. escrow agent discounts the escrow fee to make up the short funds, without informing the seller. seller consents in writing. |
I only III only Both I and II II only |
III only |
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Escrow agents must treat information as confidential. strictly comply with the escrow instructions. |
I only II only Both I and II Neither I nor II |
Both I and II |
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During escrow, if an unresolved dispute should arise between the seller and buyer preventing the close of escrow, the escrow holder may legally |
request the real estate agents of the parties get a mutually signed agreement of the parties in order to close escrow. sue the parties for specific performance. act as a mediator. None of the above. |
request the real estate agents of the parties get a mutually signed agreement of the parties in order to close escrow. |
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Personal property is used for consideration in the sale of real property. What is required on closing? |
Title insurance Bill of sale Writ of Execution Bulk sales insurance |
Bill of sale |
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An escrow to purchase property was opened on September 1 and all instructions were placed in escrow with closing scheduled for December 1. Prior to the closing of the escrow, the seller requested the escrow agent to change the closing date to January 2 for income tax purposes. However, the buyer would not agree to this. The escrow agent should: |
change the date after the seller signs a release relieving the escrow agent from all liability for making the change. refuse to change the closing date without the buyer's approval. change the closing date. take a position as a reconciler and try to bring the buyer and seller to an agreement. |
refuse to change the closing date without the buyer's approval. |
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When a title insurance policy is issued: an inspection of the records has been made. premiums are always paid on an annual basis. |
B only Both A and B A only Neither A nor B |
A only |
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A property sold for $520,750. The listing broker's share of the 7% commission was 65%. What amount did the listing broker receive? |
$22,605. $23,694. $36,453. $36,950. |
$23,694. |
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A home sold for $200,000. The buyer assumed an existing loan against the property for $160,000. The documentary transfer tax for this county is $.55 per $500 of consideration. The transfer tax is |
$11.00 $22.00 $33.00 $44.00 |
$44.00 |
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A broker selling personal property along with the real property would have the seller use which of the following to convey title to the personal property? |
Promissory note Financing statement Bill of sale Deed |
Bill of sale |
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Real property taxes are prorated on September 20th of the tax year. The taxes are not yet due, and nothing has been paid. What entry should be made on the closing statement? |
Debit to the buyer Debit to the buyer and credit to the seller Credit to the buyer and credit to the seller Debit to the seller and credit to the buyer |
Debit to the seller and credit to the buyer |
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Lany Powell's home was sold by Brown Realty for $73,000. Powell had agreed to pay a 6% commission. The listing salesperson received 25% of the commission and the selling salesperson received 30%. What amount did the listing salesperson receive? |
$1,060. $1,095. $1,314. $4,380. |
$1,095. |
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On a closing statement, the sales price is a |
debit to the buyer and a debit to the seller. credit to the buyer and a credit to the seller. debit to the buyer and a credit to the seller. credit to the buyer and a debit to the seller. |
debit to the buyer and a credit to the seller. |
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A broker's 60% of a 5% commission of a $50,000 sale is |
$1,000. $1,500. $2,500. $3,000. |
$1,500. |
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When a real estate sales transaction is to be closed in escrow, the escrow officer is neutral with respect to the interest of each party to the transaction. serves in place of an attorney for the parties to the transaction. |
Both I and II I only II only Neither I nor II |
I only |
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Which can be performed by an escrow agent? Order the title insurance report and policies Draft legal documents Disburse funds as authorized by both principals Record documents |
I and II only I, III and IV only I and III only II and IV only |
I, III and IV only |
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The party responsible for payment of the closing costs with conventional financing is determined by |
the title officer. agreement of parties the seller. the principal broker. |
agreement of parties |
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Which of the following liens normally takes priority over all other liens? |
Judgment liens Real property tax liens Mechanics liens Mortgage liens |
Real property tax liens |
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A 'title plant' is a |
subdivision map. corner marker. collection of real estate records. policy of title insurance. |
collection of real estate records. |
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When a real estate sales transaction is to be closed in escrow, the escrow agent |
serves as an attorney for the parties to the transaction. acts only on express written instructions from the listing broker. protects the interest of each party to the transaction. is a sub-agent of the broker. |
protects the interest of each party to the transaction. |
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The buyer assumes the seller's mortgage with a pro-ration date of June 20 and will begin making payments on July 1. How should the interest adjustment be shown on the closing statement? |
The buyer should receive a credit for 20 days of interest. No adjustment is required because the buyer is assuming the mortgage. The buyer should receive a credit for 10 days of interest. The interest is prorated and placed in the buyer's escrow account. |
The buyer should receive a credit for 20 days of interest. |
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In most cases, the priority of a lien on real property is established by the |
Statute of Frauds. date of recording. Statute of Limitation. amount of the lien. |
date of recording. |
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When referring to certain pro-rations, the term impounds refers to |
reserves. transfer taxes. attachment. liens. |
reserves. |
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When escrow instructions differ from the sales contract, and the escrow instructions have been signed by both the buyer and seller, which is correct? |
Everything is void. The escrow instructions take precedence. The seller's broker must write a new deposit receipt. The deposit receipt takes precedence. |
The escrow instructions take precedence. |
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An escrow agent is authorized to do which of the following? Disburse funds as authorized by both principals Draft legal documents Review legal documents for typographical errors |
I and III only III only I, II and III I only |
I and III only |
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At settlement, all of the following items will usually be prorated between buyer and seller EXCEPT |
mortgagee's title insurance premium. interest on an assumed loan. rents collected in advance. real property taxes. |
mortgagee's title insurance premium. |
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The best way to discover a flaw in the recorded title to a piece of real property is by |
calling the county surveyor. hiring a lawyer. taking out property insurance. a search of title. |
a search of title. |
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A bill of sale is used to convey title to |
real property. an easement. a life estate in real estate. personal property. |
personal property. |
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The escrow agent represents the |
both buyer and seller. buyer only. seller only. principal broker. |
both buyer and seller. |
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Under RESPA 9, the responsibility for selecting a title company rests with |
the seller. both the buyer and the seller. the buyer. the broker. |
the buyer. |
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A transaction is closed on August 20th of the tax year. Where do you enter the tax pro-ration on the closing statement? Debit to the buyer Credit to the seller |
II only Both I and II I only Neither I nor II |
Neither I nor II |
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How can a lender be sure that he/she has an enforceable lien? |
Mortgagee's title insurance policy Deed Recordation None of the above |
Recordation |
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If the buyer in a real estate transaction deposits funds into escrow, the escrow agent can pay out the funds in accordance with the written instructions of the principals to the escrow transaction. buyer alone, in the event the buyer is unable to obtain the financing which was a condition of the agreement to purchase. |
Both I and II I only II only Neither I nor II |
I only |
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An escrow closing statement referring to recurring costs could be describing |
impound accounts for taxes and insurance. deed transfer charges. title insurance. None of the above. |
impound accounts for taxes and insurance. |
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A bill of sale is used to convey title to an easement. personal property. a life estate in real estate. real property. |
II and III only II only IV only I and IV only |
II only |
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A buyer assumes an existing loan when purchasing a single-family residence. The loan assumption on the closing statement would be shown as a |
credit to the seller. debit to the buyer. debit to the seller and credit to buyer. credit to the buyer and a credit to the seller. |
debit to the seller and credit to buyer. |
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Tracing the ownership, conveyances and encumbrances of real property is known as |
cloud on title. recordation of title. chain of title. title search. |
title search. |
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Adams is selling his property to Katter for $94,000, and Katter is assuming an existing mortgage at 4-1/2% interest per annum with the unpaid balance of $9,200. Mortgage payments are due the first of each month and include interest up to but NOT including the day of payment. The last payment was made March 1, and settlement is to be March 26. Compute the interest pro-ration that will be credited to the buyer using a 365-day year, and holding the buyer responsible for the day of closing. |
$9.72 $28.36 $39.32 $305.50 |
$28.36 |
