Closing The Transaction

Front 1

what is another name for closing?

Back 1

settlement

Front 2

The closing process includes?

Back 2

the signing of documents that transfer the title of the proprety from the seller to the buyer

Front 3

closing is?

Back 3

the final meeting of the parties involved in the real estate transaction at which the transaction documents are signed and the deed and money are transferred

Front 4

What does the closing agent do at closing?

Back 4

holds the documentents and money until all of the terms, condition and contingencies have been met.

Front 5

What happens once all is in order?

Back 5

the loan will be funded and the money will be sent to the closing agent along with the buyers funds.

Front 6

What happens next?

Back 6

closing statements are prepared and deliverd, deeds are recoorded and money is paid to the proper parties.

Front 7

What four things must be accomplished with the paperwork?

Back 7

prepared, inspected and corrected and signed

Front 8

For preparation what must the closing agent do?

Back 8

conducts a title search and obtains certificates of estoppel to verify outstanding balances on loans, liens and encumbrances.

Front 9

What does the closing agent use to prepare the documents?

Back 9

sales contract, invoices submitted by various third parties and instructions from the lender to prepare the documents.

Front 10

HUD-1 Settlement Statement does what?

Back 10

verifies where all the money is going

Front 11

Do buyers and sellers approve the HUD-1?

Back 11

Yes

Front 12

When are escrow instructions used in Florida?

Back 12

when lenders request that the buyer and seller approve the instructions as part of the closing

Front 13

Inspection is what

Back 13

where both parties review the documents that are of interest to their side

Front 14

approval and exchange are what?

Back 14

interwoven due to certain events needing to take place before others.

Front 15

Who attends the closing meeting?

Back 15

closing agent, seller, buyer, title officer, loan officer, real estate agents and sometimes attorneys.

Front 16

WHere can the meeting take place?

Back 16

office of the broker or attorneys, lender or the title insurance company.

Front 17

who typically conducts the meeting?

Back 17

the title agent

Front 18

the real estate associate's role at closing is what?

Back 18

as prepared as possible to represent the client's best interests.
make sure all agents know what may occur in the meeting
makes sure the closing agent has access to all needed information so the transaction can close

Front 19

What must the seller or seller's attorney do?

Back 19

prepare the paperwork that will ensure a smooth tranfer of ownership and answer questions regarding the status of the property and take the documents to the closing meeting

Front 20

What are the documents needed for a closing meeting?

Back 20

Deed,
survey
property tax bill
homeowners insurance policy
title insurance policy
abstract of title
flood insurance policy

Front 21

Deed

Back 21

a warranty deed is the most common deed used

Front 22

survey

Back 22

shows the property's boundaires, improvements, and any encroachments

Front 23

Property tax bill

Back 23

try to bring both the bill and receipt to show how much is owed. It the tax bill is not available, the taxes are estimated to close teh transaction.

Front 24

Homeowner's insurance policy

Back 24

lenders will often requrie that this type of insurance be carried.

Front 25

Title insurance policy

Back 25

lenders typically require this to protect them from claims of ownership by people other than the buyer

Front 26

abstract of title

Back 26

if title insurance is not used, the seller is responsible for bringing the abstract of title or the the abstracter to the meeting.

Front 27

Termite inspection certificate

Back 27

FHA or VA loans require this certificate and legally required in certain areas

Front 28

water and sewer certification

Back 28

properties that are not connected to public facilities must have a certificate that indicates that they have a private water source and sewage disposal system

Front 29

Building code compliance certificate

Back 29

some areas require that a property be inspected before sale to ensure that it conforms to all current building codes

Front 30

Certicicate of occupancy

Back 30

new homes require this and the city will provide it

Front 31

off set statement

Back 31

this is a document that is used if their is a lien on the property that will indicate the balance due

Front 32

beneficiary statement

Back 32

lenders statement that cites important info about the trust deed, including unpaid balance, monthly payment and interest rate

Front 33

bill of sale for personal property

Back 33

details all the personal items being sold with the property

Front 34

Homeowners association documents include:

Back 34

restrictions, by laws, articles of incorporation, reserve fund report, management company contract or name

Front 35

Documents needed for an income property?

Back 35

current leases, rent schedules, lists of current expenditures, letter to current tenants informing them of change in ownership

Front 36

Buyer and buyers attorney responsibilities

Back 36

have the money available to pay for the property and the closing. they must also inform the lender of when and wher the closign meeting will occur.

Front 37

what obligations must be complete prior to the closing?

Back 37

complete any contingencies, finances, if need, deposit additional funds required to pay property and closing costs with closing agent

Front 38

Lender

Back 38

wire transfer the amount of the loan or prepare a cashier's check to be presendted at the meeting.
Create a note and mortgage to be signed by the buyer.

Front 39

Title insurance or title abstracter

Back 39

this is only if a title insurance policy is being issued. the representative from the title company must bring info to the closing meeting that provides the status of the properties title.

Front 40

Marketable title

Back 40

is a saleable title reasonably free from risk of litigation over possible defects

Front 41

abstractors

Back 41

investigated the status of the title to property

Front 42

abstract of title

Back 42

is a written summaryof all useful documents discoverd in a title search

Front 43

chain of title

Back 43

is the public record of prior transfers and encumbrances affecting the title of a parcel of land

Front 44

opinion of title

Back 44

is written statement by an attorney or title agent determing whether the property has clear and marketable title or is encumbered.

Front 45

title plants

Back 45

the books that stated the title was clear

Front 46

title insurance

Back 46

was created in response to the need for reliable assurance of title combined with an insurance against loss caused by errors in searching recoreds and reporting the status of title

Front 47

clouds the title

Back 47

if there is a missing connectiom in a property's history or ownership, if a deed was recorded in error or is incomplete.

Front 48

Lenders title insurance policy

Back 48

is designed to benefit the lender
typically have extended coverage
cover only the amount of money still owed on the loan, therefore the lenders policies decline in coverage as the buyer pays off the mortage.
at closing typically the buyer would pay for the lenders title insurance policy

Front 49

owner's title insurance policy

Back 49

is designed to benefit the owner
usually a standar policy
is in force for the duration of the policy
owners policy can't be assigned
seller of property typically pays for this

Front 50

ALTA- American land title association

Back 50

national trade association for title insurance companies and title insurance agens

Front 51

two types of title insurance are:

Back 51

standard and extended

Front 52

standard coverage policy

Back 52

usually issued to home buyers,
no physical inspection of the property is required and teh buyer is proteched against all recorded matter and risk.

Front 53

what does a standard coverage policy protect the buyer from

Back 53

matters of record
forgery
impersonation
possibility that a deed of record was not delivered with intent to convey title
the loss, which might arise from the lien of federal estate taxes the expense incurred in defending the title
mining claims
reservation in patents or water rights
zoning ordinances

Front 54

it does not protect against

Back 54

defects in the title know to the holder
easements and liens which are not shown by the public records
rights or claims of persons in physical possession of the land who claims are not shown by public record

Front 55

extended coverage policy cover

Back 55

unrecorded hazards such as: outstanding mechanic's liens, tax liens, encumbrances, enroachments, unrecorded physical easements, facts a correcy survey would show certain water claims, parties in possision including tenants and owners under unrecorded deeds

Front 56

The Florida department of financial services is respoinsible for what?

Back 56

licensure of title insurance companies and agents of the title insurance companies

Front 57

title insurance are paid how?

Back 57

one time fee and are not prorated at closing

Front 58

how long does title insurance remain in effect

Back 58

until the property is sold even if the owner dies

Front 59

Title insurance companies are prohibited from doing what?

Back 59

giving rebates or dividing any title insurance premiums

Front 60

is taxation indirect or direct?

Back 60

indirect

Front 61

land taxation began in what year and by who?

Back 61

1086 william the conqueror

Front 62

property taxes are paid when /

Back 62

in arrears (at the end of each tax year)

Front 63

on jan 1st prperty taxes become what on real property ?

Back 63

a lien

Front 64

when is the first instalment due?

Back 64

november 1 and offers a discount

Front 65

can property taxes be cleared by a foreclosure?

Back 65

No

Front 66

what is the schedule for property taxes

Back 66

Nov 1 property taxes are due for a current year
December 31 current tax year ends
Jan 1- start of new tax year
March 1- tax exemption filing periord ends from prior year
April 1- property taxes become delinquent

Front 67

ad valorem

Back 67

means according to value examples are: property taxes, special assessments and transer taxes

Front 68

real property is taxed how?

Back 68

at the local level through ad valoreum property taxes, special assessments and transfer taxes

Front 69

Florida tax districts are broken into four categories:

Back 69

1.) City
2.) county
3.) school board
4.) special

Front 70

taxing authority

Back 70

is an organization that is legally able to set (levy) and colect a tax

Front 71

each of these authorities can impose their own taxes?

Back 71

local governments,
school districts
drainage districts
sanitary districts
recreational districts

Front 72

immune properties

Back 72

those owned by governements

Front 73

exempt properties

Back 73

hospitals, homesteads and property belonging to religious organizations

Front 74

homestead tax exemption must be filed by when

Back 74

by March 1st and the home must be occupied as of Jan 1

Front 75

who do you file homestead with?

Back 75

assessor's office

Front 76

who's responsibility is it to file homestead and terminate homestead?

Back 76

the owner

Front 77

other exemptions

Back 77

widows or widowers
legally blind
permanently disable
only two per year

Front 78

Can property taxes me made in payments

Back 78

yes in four installments

Front 79

What is the property tax based off of?

Back 79

assessed value of the property

Front 80

just value

Back 80

is the fair and reasonable value based on objective valuation methods , the location, size and condition of the property.

Front 81

save our home amendment

Back 81

is a cap on the amount a homesteaded property's assessed value may increase annually. no more than 3% or the percentage change of the CPI

Front 82

Taxable value

Back 82

is the value of the property after exemptions have been deducted.

Front 83

tax rate

Back 83

is applied to the taxable value of the property to determine the annual property taxes due.

Front 84

tax rates are shown in what?

Back 84

Mills

Front 85

Mill

Back 85

is one one thousandth of a dollar.
dollar has 1,"",000 mills, therefore a cent has 10 mills. So a tax rate of .010 equals 10 mils

Front 86

what happens if you dont pay your property taxes

Back 86

a tax certificate is created to sell the property
force a public foreclosure after two years and requesting a tax deed.

Front 87

tax deed

Back 87

is a document given by a governmental body to convey title to a property that was sold for nonpayment of taxes

Front 88

closing costs

Back 88

are the expenses buyers and sellers normally incur in the transfer of ownership of real property

Front 89

closing statement

Back 89

is an accounting of funds made to the sellers and buyers individually

Front 90

typically who pays for title insurance?

Back 90

the seller and any deliquent liens

Front 91

closing costs are usually what?

Back 91

prorated or allocated

Front 92

allocation

Back 92

assigns a cost (generaly one not yet spent) to either the seller or the buyer

Front 93

proration

Back 93

divides a cost (most often one that has already been paid) between the two parties ,

Front 94

what two fees are typically prorated

Back 94

property tax and interest

Front 95

when is the proration costs due?

Back 95

at the date of closing

Front 96

what two ways are proration calculated?

Back 96

365 day year method or a 30 day month method

Front 97

the closing day would go to who in the calucuation?

Back 97

the buyer

Front 98

Property tax

Back 98

are typically prorated and if the seller prepaid, they expect to get the unused portion back as a credit.

Front 99

assumable loans

Back 99

when a buyer assumes an existing loan the interest to paid at the end of the year goes to the seller who owes their portion of time used.

Front 100

escrow account is also referred to as an?

Back 100

impound account

Front 101

what is an escrow acccount?

Back 101

a trus account for funds set aside for future recurring costs relating to a property, such as payment of property taxes and insurance

Front 102

what three categories do allocated costs fall into?

Back 102

inspections, required retrofits and fees

Front 103

some items that may be on the list include?

Back 103

transfer taxes, recording fees and hazard and title insurance

Front 104

transfer taxes

Back 104

are monies paid to state governments to transfer the ownership of property from one owner to another which allows government to assess property taxes

Front 105

what is another name for transfer tax?

Back 105

Documentary stamp tax or conveyance tax

Front 106

who normally pays the transfer of taxes?

Back 106

the seller

Front 107

who normally pays state taxes associated with financing?

Back 107

the buyer

Front 108

there are three types of transfer taxes, what are they?

Back 108

documentary stamp tax on deeds
documentary stamp tax on notes
intangible tax on new mortgages

Front 109

Documentary stamp tax on notes

Back 109

aka: doc stamps or stamp tax b/c the county recorder places stamps on the recorded deed or note to indicate the amount of the documentary transfer tax paid.

Front 110

how is this calculated?

Back 110

.35 cents per 100 dollars on the face value of the note (assumed notes are paid on the unpaid balance of the note)

Front 111

intangible tax on new mortgages

Back 111

which is not a stamp tax
it is due before a new mortgage is recorded
.002 per one dollar of debt

Front 112

documentary stamp act on deeds

Back 112

.70 per 100 dolars

Front 113

recording fees

Back 113

are monies paid to government agencies, typically county to legally record documents that concern the property
these are paid by the buyer

Front 114

title and hazard insurance

Back 114

typically both the owner and the lender take out seperate policies
the previous owner pays for a new owners policy
and the buyer pays the lenders

Front 115

hazard insurance

Back 115

is a property insurance policy that protects both the owner and lender against physical hazards to property such as fire, windstorm damage. Lenders require this and they get the money from the claim.

Front 116

credit

Back 116

is the reduction or elimination of an assest or expense and is recorded on the right side on a closing statement

Front 117

debit

Back 117

shows the amount owed

Front 118

who pays for the preparation of the deed?

Back 118

the seller and the buyer pays for the preparation of the loan documents

Front 119

sellers statement is?

Back 119

a record of the financial proceeds the sellers receive upon the transaction's closing.

Front 120

Buyers statement?

Back 120

record of costs and credits incurred for the purchase of the property

Front 121

closing statement

Back 121

is an accounting of funds made to the sellers and buyers individually

Front 122

who completes the closing statement?

Back 122

the closing agent

Front 123

estimated closing statement

Back 123

serves as a preliminary copy of the HUD-1 Settlement and outlines all credits and debits related to completing the sale.

Front 124

HUD - 1 Settlement Statement

Back 124

uniform settlement statement is a standardized two page form that serves as the official itemized summary of all settlement charges. also showing the flow of money

Front 125

composite closing statement

Back 125

is a one page estimate of costs and expenses for both parties

Front 126

the composite closing statement consists of five sections

Back 126

information
proations
expenses
summary

Front 127

information includes:

Back 127

the purchase price, binder deposit (good faith deposit) and mortgage amounts

Front 128

prorations

Back 128

includes expenses and or reimbursements on pro-rata basis of the total expense. property taxes, mortgage interest, rents, and insurance are commoly prorated items.

Front 129

expenses

Back 129

the charges for both the buyer and the seller that generally appear only as a debit to one party.

Front 130

summary

Back 130

total debits and credits the balance due to the seller and from the buyer and a grand total.

Front 131

brokers statement

Back 131

also knows as a cash reconciliation statement shows receipts in one column and disbrusements in the other. column should balance