RE: Closing Basics
Title search
A search of public records to provide a title commitment or abstract of title. to collect evidence that the title is a marketable title free of encumbrances.
Closing Disclosure
According to RESPA, what must the lender give to the borrower in the days immediately prior to settlement? is signed and agreed to at closing and reconciles what the final financial obligations are for both the buyer and seller.
The seller
According to custom, who pays the costs on the day of closing for property taxes, utilities, etc.?
Mortgage loan commitment
After the buyer signs the note and mortgage, the mortgage company can deliver the funds.
Sale Agreement
Allows the buyer to legally possess the property once all terms and conditions have been satisfied.
the title company representative
At closing, the ______________ presents all documents to the parties and obtains signatures, and delivers evidence that the title is insured
Compensation agreement
Brokerages of the agents representing the seller and buyer take their share of the commission and pay the agents their split as contracted.
attorney or closing agent
Brokerages receive their shares of commission by providing the ________or _______ agent with a broker statement (aka broker demand) that shows how much each brokerage should receive.
Chain of title
Establishes path and proof of ownership. establishes the history of ownership
The tax bill will be prorated to the day of closing.
How are accrued real estate taxes that have been assessed but not yet due handled in a real estate transaction?
These are usually prorated based on a 360-day statutory year (30 days × 12 months).
How are mortgage interest, taxes, insurance, and other similar expenses prorated?
Loan Estimate
Lists the charges the buyer is likely to pay at settlement
Abstract of title
Obtained from a title insurance company to provide evidence of title
Closing Disclosure
Prior to closing, agents should examine the __________ for errors, particularly ensuring that the down payment has been credited appropriately.
Insurance Binder
Prior to closing, the buyer must obtain an?
Title insurance
Protects the buyer from defects in the title
Settlement service providers
RESPA prohibits kickbacks between which parties?
Affidavit of title
Seller's sworn statement assuring there are no other title defects not shown in the title search
day of closing
The buyer will receive rents that are prorated as of the _______
Listing agreement
The listing agent's broker receives the commission for the sale's transaction in accordance with the listing agreement.
Brokerage agreement
The selling agent's broker pays the buyer agent's commission to the buying agent's broker.
Title insurance contract
The title company delivers the title insurance policy and the new home owner pays the premium.
seller to the buyer.
Title changes hands when the deed is transferred from the __________ to the _______
Marketable title
Title to property is free and clear of liens and only subject to loan payoff and any taxes owed
Taxes owed ÷ 12 months = taxes owed per month. Multiply taxes per month by number of full months that have passed = accrued taxes seller owes at closing
What calculation is used to determine the accrued taxes a seller owes at closing? Assuming the closing is held on the first of the month, and the buyer owns the day of closing. Use the statutory year. (360 days)
Seller net sheet
What can listing agents prepare for their clients to give them unofficial estimates of all closing costs? This is a closing estimate prepared for sellers to let them know their estimated closing costs, as well as how much money they'll receive at the closing table.
Constructive notice
What type of notice results from publicly recording a title transfer?
Actual notice
What's the term for a notice given directly to and received by a person?
Closing statement
When the buyer and seller both have costs to pay, which form shows who pays what?
Mortgages and home equity credit lines
Which type of federally related lending transaction is covered under RESPA?
The agents for the buyer and seller
Who closes on the cooperative brokerage agreement?
The buyer and the lender's attorney
Who closes on the mortgage loan commitment at closing?
The buyer
Who is responsible for obtaining an appraisal?
The seller
Who usually pays the broker commission?
Lender's attorney
Who usually represents the lender at a closing?
The buyer
Who's responsible for any tax reserves required to pay property taxes?
The seller
Who's responsible for paying for recording documents to clear all defects from the title?
RESPA, the Real Estate Settlement Procedures Act
ensures that buyers have knowledge of all settlement costs. Lenders are required to give borrowers a Loan Estimate form listing settlement costs within three days of loan application, and a Closing Disclosure form at least three days prior to closing.