Unit 8: Escrow and Closing

Documentary transfer tax is usually based on _____ per $1,000 of the purchase price. A. $1.65 B. $1.55 C. $1.10 D. $0.55

$1.10

For property tax purposes, how much is the California homeowner's exemption? A. 3,000$ B. 5,000$ C. 7,000$ D. 2,000$

$7,000

Ad valorem

A Latin phrase meaning according to value.

Assessment Roll

A list of all taxable property showing the assessed value of each parcel; establishes the tax base.

Escrow

A small and short-lived trust arrangement.

Beneficiary Statement

A statement of the unpaid condition of a loan and describes the condition of the debt.

Impound Account

A trust account set up for funds set aside for future costs relating to a property

Which of the following is not covered by title insurance? a. A zoning ordinance, regulation, or plan b. Loss due to a missing signature of a spouse on a deed to community property c. Unpaid county property tax not shown in the policy d. Incompetence of a former seller

A zoning ordinance, regulation, or plan

Escrow Holder

Acts a neutral agent of both buyer and seller

Which of the following best describes completed escrow? a. It is equivalent to a perfect escrow. b. The escrow holder has ceased being an agent for both parties. c. All escrow instructions have been carried out. d. All services of the escrow holder are involved.

All escrow instructions have been carried out.

Completed Escrow

All terms of the escrow instructions have been met

Section

An area of land, one square mile, or 640 acres; 1/36 of a township.

Title Insurance Policy

An insurance policy that protects the insured against loss or damage due to defects in the property's title

Preliminary Report

An offer to issue a policy of title insurance in the future for a specific fee

Calendar Year

Begins on January 1 and continues through December 31 of the same year

Who must sign escrow instructions? A. Buyer B. Buyer & Seller C. Escrow Holder D. Broker

Buyer & seller

.A new roof, swimming pool, or other cosmetic addition to property is known as: A. homeowner's exemptions. B. special assessments. C. Capital improvements D. taxable gains

Capital Improvements

If an escrow holder receives pest control reports from two different companies, the escrow officer should: a. submit the estimate requiring the most work. b. contact both inspectors and determine which of the two reports should be accepted. c. contact the brokers to ask for instructions from the buyer and seller. d. contact the broker to ask for instructions from the seller.

Contact the brokers to ask for instructions from the buyer and seller.

How would a loan for the purchase of a residence appear on the buyer's closing statement? a. Credit to buyer, debit to seller b. Debit to buyer, credit to seller c. Credit to buyer d. Debit to buyer

Credit to buyer

The buyer's and seller's agreement is indicated in the: A. trust deed. B. escrow instructions. C.settlement D. closing account

Escrow instructions

Escrow instructions must be: a. chartered. b. Executed. (signed) c. notarized. d. Recorded.

Executed. (signed)

.Lenders require escrow holders to verify the presence of: A. fire insurance B. auto coverage insurance C. health insurance D. accidental death insurance

Fire insurance

Of the following, which is not used as a legal description when conveying real property? A.Geodetic Survey System. B.Lot, block, and tract system C.Metes and bounds system D.Public Land Survey System

Geodetic Survey System.

Marketable Title

Good or clear saleable title reasonably free from risk of litigation over possible defects.

Which of the following is regarded as a recurring cost in a closing statement? a. Escrow fees b. Recording fees c. Impound accounts d. Premiums for title insurance

Impound accounts

Which of the following statements concerning escrow is correct? a. A perfect escrow exists when the buyer's closing statement and the seller's closing statement are exactly identical. b. In order for the escrow to be able to close, the buyer may be required to pay more than the amount stated in the escrow instructions. c. The amount in the final closing statement must be the same as the amount in the escrow instructions. d. None of the above

In order for the escrow to be able to close, the buyer may be required to pay more than the amount stated in the escrow instructions.

Metes and Bounds

Land description that delineates boundaries and measures distances between landmarks to identify property.

Plat Map

Map of a subdivision indicating the location and boundaries of individual lots

Which of the following title insurance policies protects against all risks? a. Standard policy b. Extended policy c. A.L.T.A. policy d. No policy insures against all risks.

No policy insures against all risks.

Which of the following items would most likely appear as a credit in the seller's closing statement? a. Prepaid taxes b. Delinquent assessment lien c. An assumed loan d. Title insurance premium

Prepaid taxes

An example of an ad valorem tax would be: a. income tax. b. estate tax. c. bridge toll. d. property tax.

Property Tax

For income tax purposes, which expense is deductible to a homeowner for a primary residence? A.capital improvements B.Property taxes C.Maintenance expenses D. depreciation

Property Taxes

Which system of land description employs meridians and baselines? a. Metes and bounds b. Public Land Survey system c. Subdivision system d. Lot, block, and tract system

Public Land Survey system

How do special property tax assessments differ from annual property tax assessments? a. Annual assessments have priority over special assessments. b. Special assessments are imposed only by local authorities. c. Judicial foreclosure is required for unpaid special assessments. d. Special assessments provide for local improvements.

Special assessments provide for local improvements.

Fiscal Year

Starts on July 1 and runs through June 30 of the following year; used for real property tax purposes

Special Assessments

Taxes used for specific local purposes

Property Taxes

Taxes used to operate the government in general

Proration

The division and distribution of expenses and/or income between the buyer and seller of property as of the date of closing or settlement.

When buying a home, a purchaser was given a grant deed and a standard policy of title insurance. Which of the following is warranted by the seller but is not covered by the standard policy of title insurance? a. The grantor is legally competent. b. The grantor actually signed the deed. c. The grantor has placed no undisclosed liens against the property. d. There are no forged deeds in the chain of title.

The grantor has placed no undisclosed liens against the property.

Vesting

The way title will be taken

Which of the following statements regarding escrow procedures is correct? a. A broker may hold an escrow for compensation for other parties if the broker has no interest in the transaction. b. When the escrow requirements have been met, the escrow agency changes from being agent of both parties to an agent of each party. c. When the escrow holder is in possession of a binding contract between the buyer and seller, it is said to be a complete escrow. d. The escrow officer acts as an arbitrator of disputes between buyer and seller.

When the escrow requirements have been met, the escrow agency changes from being agent of both parties to an agent of each party.

Abstract of title

Written summary of all useful documents discovered in a title search

If a buyer assumes an existing loan when purchasing a single-family residence, the settlement statement at close of escrow would show the assumption of the loan as: a. a debit to the buyer. b. a debit to the seller. c. a credit to the lender. d. neither a credit nor a debit

a debit to the seller.

County governments levy taxes through: a. property taxes. b. special assessments. c. transfer taxes. d. all of the above.

all the above

The escrow holder is the agent of which of the following? A. Buyer and seller B.Buyer only C.Seller only D.Broker

buyer & seller

An escrow agent is authorized to: a. give the buyer advice about available financing. b. change the escrow instructions when asked to do so by the listing broker. c. call for funding of the buyer's loan. d. authorize a pest control company to make corrective repairs.

call for funding of the buyer's loan.

The reason for using an escrow when a deed of trust is conveyed is to: a. comply with the Civil Code. b. ensure that the conditions and instructions of the agreement are satisfied. c. allow for recordation of the deed. d. provide for third-party liability.

ensure that the conditions and instructions of the agreement are satisfied.

After a property is declared tax-defaulted for failure to pay property taxes, the occupant of the property: a. must vacate immediately. b. must pay rent to the State of California. c. may continue to reside on the property unhindered. d. is freed of tax obligations immediately.

may continue to reside on the property unhindered.

A unilateral change in escrow instructions may be made by: A. Neither buyer nor seller B. either buyer or seller C. escrow holder D. escrow agent

neither buyer nor seller

A buyer who wishes to insure title to real property when it is purchased should secure a(n): a. guarantee of title. b. abstract of title. c. certificate of title. d. title insurance policy.

title insurance policy.