Chapter 13 Escrow and Closing Flashcards Preview

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Flashcards in Chapter 13 Escrow and Closing Deck (21)
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1

Escrow terminates:

  • if the buyer and seller mutually agree to terminate the escrow
  • when the transaction closes
  • if the terms of escrow instructions have not been fulfilled by the specified closing date
  • All of the above

all of the above 

2

A bill of sale is used to convey title to 

personal property 

3

When the executed escrow instructions differ from the purchase agreement, which of the following is correct?

  • The escrow agent must change the escrow instructions to conform to the purchase agreement
  • the transaction is void
  • a new purchase agreement must be executed
  • the escrow instructions take precedence 

- the escrow instructions take precedence 

4

A proper escrow, once established is

not subject to the control of any one interested party 

5

Escrow agents are required to determine whether the seller of property is a US citizen and, if not, withhold 15% of the net proceeds under the provisions of:

FIRPTA (foreign investment in real property tax)

6

On the HUD-1 Settlement Statement, the purchase price will be listed as 

a credit to the seller and a debit to the buyer 

7

Escrow agents must:

  • remain neutral by acting as agent for both buyer and seller
  • strictly comply with the escrow instructions
  • treat information as confidential
  • all of the above

All of the above 

8

To prorate means to

allocate the financial impact of a particular item on the parties as of a particular date

9

The money and documents of a real estate transaction are held in trust until closing by 

a neutral third party known as the escrow agent 

10

One of the essential requirements for a valid escrow is a binding contract. This may be:

  • an option agreement
  • a lease agreement 
  • an exchange agreement
  • any of the above

any of the above 

11

while a real estate transaction is in escrow, the escrow agent

acts only on the express written instructions signed by the parties 

12

A debit on the buyer's side of the settlement statement 

is an item that must be paid by the buyer 

13

When a buyer assumes an existing mortgage, the mortgage balance will appear on the settlement statement as 

a credit to the buyer and a debit to the seller 

14

RESPA requires which of the following for federally related loan transactions?

1. A copy of a booklet about settlement procedures that explains RESPA, closing costs, and the settlement statement

2. a uniform settlement statement 

both 1 and 2 

15

items (such as property tax) that have been proportionally allotted on a closing statement as to the financial responsibility of the parties are known as 

prorations

16

The premium for a title insurance policy purchased by the seller would appear on the settlement statement as 

A debit to the seller

17

In most cases, the priority of a lien on real property is established by the 

date of recording 

18

Escrow agents must report every sale of real property to the Internal Revenue Service. The form used to report the seller's name and social security number is the 

1099-S

19

If a seller has already paid the property taxes for the year, the prepaid taxes will appear on the settlement statement as 

a credit to the seller and a debit to the buyer 

20

Which of the following are duties performed by an escrow agent if so directed in the escrow instructions? check all that apply:

  • draft legal documents
  • disburse funds as authorized by the principals
  • order the title insurance report and policies 

-disburse funds as authorized by the principals

-order the title insurance report and policies  

 

21

Which of the following charges is generally a debit to the seller on the settlement statement:

  • appraisal fee
  • lender's title insurance premium
  • real estate agent sales commission
  • origination fee

real estate agent sales commission