Real Estate National Exam Unit 4: Recordation, Title Insurance and Settlement
In most cases, what must be done for a deed to be recorded?
Acknowledged is required before it can be recorded.
What is a credit to a buyer?
Anything that decreases the amount of money the buyer must bring to closing. Example: Earnest Money
What is a debit to seller?
Anything that decreases the amount of money the seller takes from the closing. Example: Brokerage Fee
What is a debit to a buyer?
Anything that increases the amount of money the buyer must bring to closing. Example: Sales price
What is a credit to seller?
Anything that increases the amount of money the seller takes from the closing. Example: Sales price
A new loan will show on the settlement statement as a buyer debit or credit?
Credit
An item paid in arrears will be a debit or credit to the buyer?
Credit
When prorating an item paid in advance will be a debit or credit to the buyer?
Debit
A prorated item has been paid in arrears typically shows on the settlement statement as a credit and debit to which?
Debit to the seller, credit to the buyer. The reason is items paid in arrears will be the obligation of the seller. The buyer will be paying the bill sometime in the future, so at closing the seller will have to give the portion the seller owes to the buyer.
What do most environmental issues fall under purview of?
EPA
Removal of mold should be done by which regulations?
EPA and state regulations on remediation (removal).
What does a clouded title mean?
Errors or missing documents...aka a broken chain.
What is the primary reason for recording documents?
Gives constructive or legal notice. Let's the world know.
Environmental impact statements are required for what?
Government projects and could be required for private development.
What is an abstract title?
It is a historical summary of the title.
What is a title report?
It states the current condition of the title and is a commitment to insure. Does not show history of past owner or encumbrances
When was lead paint outlawed?
January 1st, 1978
A deed that is not recorded lacks what kind of notice?
Lacks constructive notice.
What is the obligation of the real estate professional with a property built prior to 1/1/78?
Make sure all parties are in compliance with the lead paint laws.
What will a lender making a loan secured by a mortgage make the borrower buy?
Mortgagee's Title insurance policy
Do renters need to given the opportunity to test and remove lead pain?
No they do not have to be given the opportunity. Idea being that if that is a problem they can choose to live elsewhere. They do still have to receive a disclosure.
Is a security deposit prorated?
No. The entire amount will transfer to the new owner.
Are sellers required to do a lead inspection or removal?
No...they just must disclose if their house was built before 1/1/78 and it is up to the buyer to do an inspection.
Who bears the obligation to disclose Lead-based paint?
Only the seller not the agents. Agents are only obligated to make sure all parties are in compliance, but does not complete the disclosure...only the seller does this.
What does the Commitment list?
Policy exceptions which are defects and encumbrances that have been discovered or may exist and are not covered by the policy.
Who does mortgagee's policy protect?
Protects the lender and coverage is based on the loan amount.
What does RESPA stand for and what does it do?
Real Estate Settlement Procedures Act. It regulates lenders, title companies and real estate licenses.
What is Lis Pendens?
Recorded notice of a pending lawsuit affecting title to property.
What are the responsibilities of a real estate broker with the lead pain disclosure?
Sign the disclosure and make sure all parties sign the disclosure.
What's the difference between standard and special exceptions?
Standard: Items never covered; buyer responsible for checking. Special: Clouds specific to the property discovered by examiner.
Who decides whether stigmatized properties are disclosed?
State laws determine what issues may be disclosed.
What is the chain of title provide?
Successive ownership documents lined together.
How does a seller clear a clouded title?
Suit to quiet title
What does a notary confirm?
That the document was not signed under duress.
Which party would benefit most from recording a mortgage?
The mortgagee (or lender)
Who owns a deed when it was given to 2 people without either person's knowledge?
The person who records it first regardless of who it was given first.
Are Environmental issues considered material facts?
Yes
Is rent prorated when a sale of the property is made?
Yes
