Chapter 13 - Escrow and Title Insurance
Why would a licensee need to get a copy of the preliminary title report?
A licensee would need to get a copy of the preliminary title report in order to discuss the matter set forth in it with the clients and provides an opportunity to seek the removal of items referenced in this report that are unacceptable to the prospective insured. Such arrangements can be made with the assistance of the escrow officer.
Where can you get an ALTA policy and where can you get a CLTA policy?
ALTA policies covers the entire united states whereas CLTA only covers California. An ALTA lender policy provides extended coverage to the lender only and NOT the buyer
What is CAR form RPA-CA?
CAR form RPA-CA is the California Residential Purchse Agreement and Joint Escrow Instructions form that when the purchase offer is accepted portions of this form become the escrow instructions.
What are closing costs?
Closing costs are those amounts that the seller and the buyer have to pay beyond the purchase price of the home or property. Some examples of closing costs include fees charged for the mortgage loan, title insurance, escrow services, reconveyances, recording of documents and transfer tax to name a few. Amounts vary based on the price of the property. Buyer and seller parties may agree to share or one party may elect to pay these costs as part of the transaction.
What are the closing costs typically paid by the BUYER for the Financial Closing?
Closing costs typically paid by the BUYER for the Financial Closing include: A) Loan origination fee B) Appraisal fee C) Credit report D) Drawing up notes and trust deed E) Notary Fee F) Recording Trust deed G) Tax agency fee H) Termite inspection fee I) Interest on new loan from date of closing until first monthly payment J) Assumption Fee K) Other agreed charges L) New fire insurance premium, one year prepaid M For new FHA insured loan, mortgage insurance premium
What are the closing costs typically paid for by the BUYER for the Legal Closing?
Closing costs typically paid by the BUYER in a Legal Closing are: A) Standard Owners Policy B) ALTA Policy and inspection if ordered C) Escrow services (generally shared by buyer and seller D) Drawing second mortgage if used E) Notary fee (typically signing parties pay) F) Recording Deed G) Other agreed charges
What happens if the separate escrow instructions differ from the purchase agreement?
If the escrow instructions differ from the purchase agreement, generally, the escrow instructions prevail because they were the last documents signed.
What is an Impound Account?
Impound Account is where monthly payments for taxes and fire insurance are placed in this special reserve trust account. If the sale of the property is final, the seller is entitled to the unused portion of the impound account plus any interest earned.
What does California require of escrow companies licensed by the California Department of Corporations?
In California, escrow companies licensed by the California Department of Corporations must be structured as corporations. This also includes companies conducting escrows using the internet.
When are property taxes usually levied?
In California, property taxes are levied annually (July 1 - June 30) and are paid in two installments. Property taxes usually involve proration due to the fact that the first installment is usually due in December and the second installment is usually due in April the following year.
Who's pays for the standard (CLTA) policy?
In Southern California, the seller pays for the standard policy while in Northern California, the buyer pays for the policy. Either the buyer or seller can agree to pay for the the policy if each is in agreement.
What kind of relationship does escrow provide?
In escrow, the relationship created is a limited agency relationship governed by the content of the escrow instructions of the principals as agent for both parties.
What is the liability of an escrow?
Escrow can be held liable for its negligence or breach of duty. However, escrow companies do not have any duty to warn a party of possible fraud or point out any detrimental fact or risk of a transaction. If a BROKER is escrow, the broker would have the disclosure obligations with regards to the possibility of fraud or detrimental fact or risk of transaction.
What are escrow instructions?
Escrow instructions are written directions from the principals to the impartial third party, the escrow agent, to do all the necessary acts to carry out the escrow agreement of the principals. All parties to the escrow agreement (buyers, sellers, lenders and borrowers) sign identical or conforming instructions that fully set out the understanding of the parties to the transactions.
What is escrow?
Escrow is a french word escaroue meaning scroll or roll of writing. In English, escrow means a deed, a bond,money or piece of property held in trust by a third party to be turned over to the grantee only on fulfillment of a condition.
When is Escrow complete?
Escrow is complete when the following have happened: A) The escrow officer sends the deed and deeds of trust to the Recorder's Office. The Brokers responsibility is to confirm the record action and inform the clients. B) The escrow agent sends to the seller and the buyer the closing statements showing the disbursement of funds. C) The escrow agent forwards the title policy, assuring the buyer of marketable title, except for certain items. The agent sends the original copy to the buyer.
When is escrow created?
Escrow is created on the conditional delivery of transfer instruments and monies to a third party.
What does escrow mean?
Escrow means any transaction where a person for the purpose of effecting the same transfer, encumbering or leasing of real property or personal property to another person, delivers any written instrument, money, evidence or title to real or personal property or other things of value to a third person to be held by such third person until the happening of a specified event. The performance is then to be delivered by such third person to a grantee, grantor, promisee, promissory, obliged, obligator, bailee or Baylor or agent or employee of any of the latter.
What are escrow officers legally not permitted to do?
Escrow officers may not legally do the following: A) make a transaction for another officer B) negotiate with the parties separately C) suggest that terms or provisions be inserted in the escrow D) act as collection agencies to persuade a client to furnish funds E) notify parties that they have not ordered a certain document that may be necessary to close an escrow.
What must escrow officers do legally?
Escrow officers must legally do the following: A) act according to issued written instructions B) act as neutral parties at all times C) hold monies deposited by parties until disbursed D) follow escrow instructions in every detail unless instructions are in violation of the law E) give to parties only that information that concerns them F) make sure that escrow does not close with an unverified check.
Who primarily handles third party escrows closings in California?
Escrows are primarily handled by either third party escrows or title companies in California.
Are escrow generally required by law in California ?
Escrows generally are not required by law in California but they have become an almost indispensable mechanism in this state to protect the parties involved in exchanges, leases, and sales of securities, loans, business opportunities, sales of mobile homes and primarily real property sales.
When must funds be when entered into escrow?
Funds must be "good funds" before they can be disbursed. Good funds include cash, cashier's checks, and personal checks that have cleared.
What are the IRS reporting requirements for the buyer and the seller?
IRS reporting requirements for the buyer who makes cash payments of $10,000 or over must be reported to the IRS on form 8300. Gross Proceeds to the seller are reported on IRS Form 1099S.
What happens if the buyer dies before the transaction is completed?
If a buyer dies before the transaction is completed, the heirs may be required to continue with the purchase. However, the loan may be affected owing to qualifications.
What happens if the buyer does not elect to buy title insurance protection?
If a buyer does not elect to buy title insurance protection, the buyer is not protected even though a prior owner had title insurance.
What happens if the closing statement become inaccurate before closing?
If a closing statement becomes inaccurate before closing, a corrected statement must be provided at least one business day before closing.. Such changes requiring corrections may include changes in the types of loans, a difference in the APR and addition of a prepayment penalty.
What happens if a party refuses to agree to the release of funds in a failed escrow?
If a party refuses to agree to the release of funds when there is not a good faith dispute as to who is entitled to the funds, that party can be liable for treble damages but not less than $100 or more than $1,000. A buyers deposit may be released only if the parties agree.
What happens to a failed escrow?
If an escrow cannot be completed, the parties must agree to the release of funds (less costs and fees).
In Northern California, who may handle the escrow instructions? What about in Southern California ?
In some Northern California area, escrow transactions are handled by title insurance company and they usually process the escrow and issue the title insurance policy together. In some Northern California escrows, there are separate (unilateral) escrow instructions for each of the parties. In Southern California, escrow companies must provide escrow transactions with the title company issuing the title insurance separately. In Southern California, the parties sign joint (bilateral) escrow instructions. Regional diversity does exist.
Who pays for interest adjustment on a loan?
Interest loan adjustments will be made if a loan is taken over and both seller (credit) and buyer (debit) interest would be prorated. Usually interest on a loan is paid in advance so if the closing is made for the 15th of the month, and the buyer assumes the loan with payments due on the 1st of the month, the seller owes the buyer for one half months interest.
Can brokers delegate escrow duties to others not in his company?
No, Brokers cannot delegate escrow duties to others outside of his company.
What are Prorations?
Prorations is the adjustment and distribution of costs to be shared by buyer and seller. Typically prorated costs include interest, taxes, insurance and in the event of income property, prepaid rents.
Can Real Estate Brokers advertise their escrow business?
Real Estate Brokers cannot advertise that they conduct escrow business unless specifying that such services are only in connection with the real estate brokerage business. They are also prohibited from using a fictitious or corporate name that contains the word "escrow."
Why should real estate agents understand the escrow procedures?
Real estate agents should understand the escrow procedures s that they can both monitor the escrow to avoid delays and other problems and explain the escrow procedures to their clients and help them comply with escro requirements. Once the escrow is opened, the escrow may not make any changes to the escrow instructions based on the orders of real estate agent unless authorized to do so by the principles.
Are Brokers party to the escrow?
Real estate agents, unless principles to the transaction, are not parties to the escrow.
What are Recurring Costs?
Recurring costs are impound account costs for taxes and insurance.
What does the current preliminarily title report contain that older previous versions did not?
The current preliminary reports are now printed showing the encumbrances and exclusions and are set forth verbatim rather than referencing you to check the. "Incorporated by reference" yourself.
How are title insurance policies interpreted if there is a dispute?
Title policies are interpreted in accordance with the reasonable expectations of the insured. In the event of ambiguities, they normally would be resolved against the insured.
True/False - Before closing, the escrow is a dual agent. After closing, the escrow has separate agency duties?
True, prior to closing the escrow is a dual agent for both the buyer and the seller. After closing the escrow holder becomes agent for each principle.
Does RESPA also apply to escrow and title insurers?
Yes, RESPA also applies to escrow and title insurers. Grounds for disciplinary action are imminent if you receive a rebate from a title insurer and is considered commercial bribery and could subject the licensee to up to a year in jail and a $10,000 fine for each transaction.
Can a broker be licensed separately as an escrow?
Yes, a broker can be licensed separately as an escrow and operate the escrow business in a CBA (controlled business environment (See RESPA, Unit 12.
Can a buyer purchase extended coverage policy under a standard policy?
Yes, a buyer can purchase extended coverage policy under a standard policy for a price..
Can the escrow instruction provide for payment of the commission out of escrow and then stipulate that the brokers' commissions rights cannot be canceled?
Yes, escrow instructions can provide for payment of the commission out of escrow and stipulate that the brokers' commission rights cannot be canceled. On a case-by-case basis, the broker can authorize that a commission be paid directly to a salesperson out of broker entitled funds upon a closing.
Does the broker still have agency duties when escrow transactions have been signed?
Yes, the broker stilll has agency duties when the escrow instructions have been issued. These duties incude tracking the escrow to make certain that the escrow is receiving what it requires, and when it is required. If there are problems, the broker should notify the parties and attempt to resolve the problems. The broker should also monitor the loan application and keep in contact with the lender to avoid or resolve any problems or delays.
Where can you get additional information regarding other title insurance policies ?
You can get additional information regarding other title insurance policies from the California Title Company at www.caltitle.com
What is a deed of Reconveyance?
A deed of Reconveyance is a document that shows that a loan has been paid off to clear title. There is a reconveyance fee charged the seller for this service.
When is a contract formed?
A contract is formed when the buyer refers a sum of money to the seller and the seller acceptance is transferred to the buyer, a binding contract is formed.
What is a Beneficiary Statement?
A Beneficiary Statement shows the exact balance due from the one holding the deed of trust. This would be necessary if the existing loan is to be paid or assumed by the buyer. The escrow agent will be the one asking for the Beneficiary Statement. The Beneficiary Statement shows the balance and the condition of the loan
What does a CLTA policy cover?
A CLTA policy covers the buyer in California. It is called a standard policy and covers matters of record as to the following: A) Forgery B Lack of capacity of a grantor C) Undisclosed spousal interests D) Failure of delivery of a prior deed E) Federal estate tax liens F) Deeds of a corporation who charter has expired G) Deeds of an agent whose capacity has terminated.
What is a Demand Statement?
A Demand Statement indicates the amount due to the lender from escrow if the loan is to be paid off. It could include a pre-payment penalty.
Can a broker acts as an unlicensed escrow agent?
A broker can act as an unlicensed escrow agent only if the broker is a principal or represents the buyer or the seller.
What must the broker do each year if he conducts five or more escrows in a calendar year or has escrows totaling 1 million or more?
A broker must file an annual report with the BRE as to the number of escrows conducted and the dollar amount. The report must be filed within 60 days of the end of the calendar year.
When a broker is acting as escrow, what he do?
A broker, acting as escrow, must set aside agency relationships as well as any special interests, and adopt the position of neutral depository, the same as any escrow. Escrow funds held by a broker must be placed in a special trust account subject to periodic inspections by the Commissioner of Corporations and at the brokers own expense subject to an independent annual audit.
What is a preliminary title report?
A preliminary title report is designed to provide an interim response to an application for title insurance. It is intended to facilitate the issuance of a particular type of policy.
What does a title report do in terms of "risk elimination?
A title report is just one of the steps in the risk elimination process and includes the maintenance and collection of title records (known as the title plant), the searching and examination of the records and the underwriting standards of each title insurance company.
Who is the Escrow Agent?
An Escrow Agent is an impartial third party or stakeholder who receives and disburses documents, money and paper from every party involved in a transaction, such as a sale of real estate. The escrow operates as a neutral depositary. The business that conducts the escrow is considered the escrow agent. The individual who handles the escrow in the office is the escrow agent is called the escrow officer.
What does an extended policy NOT cover?
An extended policy does not cover the following: 1. Matters known by the insured but not covered to the insurer. 2. Government regulations such as zoning 3. Liens placed by the insured 4. Eminent domain 5. Violations of the map act
When is title insurance paid for?
Title insurance is paid for once, at the time title passes from one owner to another and it remains in effect until the property is sold again . If a property owner dies, the title insurance continues to protect the owners heirs.
What are excluded from a CLTA policy?
Items excluded from a CLTA policy include the following: A) Defects known by the insured and not disclosed to the title insurer B) Zoning defects C) Mining claims D) Taxes and assessments that are not yet liens E) Easements and liens not a matter of record F) Rights of parties in possession (unrecorded deeds, leases, options etc. G) Matters not a matter of record that would be disclosed by checking the property (such as encroachments) H) Matters that would be reveled by a correct survey I) Water rights J) Reservations in government patents. K) Exceptions to a particular problem so that a policy will not cover a loss resulting from that problem.
What is included in a preliminary title report?
Items included in the preliminary title report identifies the title to the estate or interest in the prescribed land and contains a list of defects liens, encumbrances and restrictions that would be excluded from coverage if the requested policy would be issued as of the date of the report.
What is marketable title otherwise known as?
Marketable title is also known as an abstract. An abstract of title is a recorded history of a property. It includes a summary of every recorded document concerning the property. An attorney reads the abstract and gives and opinion of title based on what the abstract reveals.
Who pays prepaid rents in cases involving income productions properties?
The rents are prorated on an actual day basis (365 or 366 days) and this would be a credit to the seller.
Can individuals be licensed under the escrow law?
No, individuals cannot be licensed under the escrow law, but certain organizations and individuals are permitted to act as escrow agents without licensure. These "individuals" include: 1) Banks 2) Attorneys to act as an escrow. Any attorney must have had a prior client relationship with a party to the escrow. 3) Real Estate Brokers 4) Title and trust companies 5) Savings associations
Is is okay to have oral instructions in escrow?
No, it is not okay to have oral instructions in escrow and show not be accepted or acted upon.
Does a preliminary title report show the condition of title?
No, the preliminary title report does not necessarily show the condition of the title; it merely reports the current vesting of title and the items the title company will exclude from coverage if the policy should be issued later.
Can title companies give kickbacks to brokers for referral business under the Rebate Law (RESPA)?
No, title companies cannot give kickbacks to brokers for referral of business and are precluded by law. They must charge brokers the same as other customers and make a sincere effort to collect any premiums due.
What is the equation on the Sellers closing statement?
On a Sellers closing statement, All credits to the seller are added (selling price, prorations etc). All debits owed by the seller are totaled and deducted from the credits. The difference is entered as a cash credit (usually) to the seller and the escrow agent forwards a check for this amount at the close of escrow.
What is the equation on the Buyer's closing statement?
On the Buyers closing statement, the buyer is charged (debited) with the purchase price of the property. The loans the buyer has obtained are credited to the buyer. Cash is credited, prorations may be debited or credited (depends on the cases) and escrow fees and closing costs are debited. The difference between the total debits and credits is usually required in cash by the escrow agent. The cash payment into escrow becomes an additional credit and forces the account to balance. Because of the forced balances, the totals on the buyers and sellers statements will be different from each other and from the purchase price.
What happens if the escrow instructions are signed by both parties and there has to be a change?
Once escrow instructions are signed, the escrow is bound to carry out the agreement. If any changes are necessary, both buyer and seller must agree to amend the escrow instructions. Neither buyer nor seller can unilaterally modify the escrow agreement once it is signed.
What kinds of other special title insurance policies are available?
Other special title insurance policies include: 1. Construction lender policies 2. Policies for venders (purchasers under real property sales contracts) 3. Policies insuring leasehold interests 4. Policies for oil and gas interests 5. Other special coverage policy amendments that can also be purchased.
What are some adjustments between Seller and Buyer?
Some adjustments between Seller and Buyer on a closing are: A) Pay any tax arrears in full (seller) B) Pay any improvement assessment arrears (seller) Assessments may have to be paid in full. C) Pay any other liens or judgments necessary to pass clear title (seller) D) Pay brokers commission (seller) E) Reimburse buyer for prepaid rents and deposits and adjust taxes, insurance and interest as required. F) Occupancy adjustments.
What are some advantages of an Escrow?
Some advantages of an escrow include: A) title to the property may be encumbered and the buyer needs someone to make a title searc for the purpose of insuring a title insurance policy B) An accurate description of the property is required for legal purposes C) The seller and the buyer need an experienced person to prepare the instrument of conveyance for their signatures D) The buyer and seller need assurance that these instructions have been carried out and that the deeds will be delivered and any monies transferred only when all terms of the contract have been satisfied. E) You need a neutral third party to handle the transactions F) Escrow provides a custodian of papers, instructions,funds and documents until the transaction is closed G) it makes possible the handling of accounting details in a professional manner H) It ensures the validity of a binding contract between participating parties I) it is of value to the buyer that funds won't be transferred until the title is conditioned to the specifications of their contract or agreement J) It is of value to the sellers assuring them that the monies have been paid and all other terms and conditions have been met.
What items would an ALTA policy cover?
Some items that a standard ALTA policy would cover are: 1. Defects found in public records 2. Forged documents 3. Incompetent grantors 4. Incorrect marital statements 5. Improperly delivered deeds
What are some items not covered by either the standard or extended ALTA policies?
Some items that are neither covered by the standard or extended ALTA polices are: 1. Defects and liens listed in policy 2. Defects know to buyer 3. Changes in land use brought about by zoning ordinances.
What are some of the laws that govern escrow?
Some laws that govern escrows state that NO ESCROW LICENSEE MAY: 1) Disseminate misleading information or deceptive statements referring to its supervision by the State of California 2) Describe either orally or in writing any transactions that is not included under the definition of escrow in the California Financial Code 3) Pay referral fees to anyone except a regular employee of its own escrow company 4) Solicit or accept escrow instructions or amended or supplemental instructions containing any blanks to be filled in after the instructions are signed or 5) Permit any person to make additions or deletions from or alterations of any escrow instruction unless it is signed or initialed by all signers of the original instructions.
What other special policies are available with regards to Title?
Some other special policies that are available with regards to Title are: 1. Special construction loan title insurance policies 2. Policies that guarantee trustee sales 3. Bankruptcy guarantees 4. Boundary line agreement guarantees 5. Special policies for uninproved land.
What are some of the many procedures that must be followed in an escrow?
Some procedures that must be followed in an escrow are: A) Order preliminary title reports B) conveying preliminary title reports to buyer C) Ordering beneficiary statement or payout demands D) Handle receipt and disbursement of all funds E) Facilitate handling preparation and signing of all documents F) Comply with all government regulations G) Act as communicator with parties to the escrow as well as broker and lender H) Ensure that all conditions of escrow are met I) Satisfy lender conditions and that a clear title will be conveyed to buyer J) Accept fire insurance policy K) Make all payments and fees L) Inform parties when escrow is ready to proceed M) Prepare closing statement N) Authorize the release and recording of all documents and disbursement of funds O) Secure title insurance policy P) Other duties and responsibility in addition to maintaining the highest level of trust and maintaining the confidentiality of the escrow.
What other adjustments must be paid by the BUYER for the closing based on closing or other agreed dates?
The BUYER has other adjustments that must be paid (credited) to the seller as follows: A) Reimburse seller for prepaid taxes B) Reimburse seller for prepaid insurance C) Reimburse seller for prepaid improvement assessment D) Reimburse seller for prepaid impounds (in case buyer is assuming current loan) E) Other occupancy adjustments (prepaid rent)
When must the Closing Disclosure Statement be in the hands of the buyer?
The Closing Disclosure Statement must be in the hands of the buyer (borrower) at least three business days before closing. A copy must also be provided to the seller no later than the day of the closing.
What ar the basic steps in closing escrow?
The basic steps in closing escrow are as follows: A) A statement showing the condition of the indebtedness and the unpaid balance of the current loan is requested from the beneficiary, the lender,. By law, the beneficiary must respond within 21 days of the receipt of request. B) When the escrow agent has received all the funds, documents, and instructions necessary to close the escrow, the escrow agent makes any necessary adjustments and prorations on the settlement sheet C) All instruments pertinent to the transactions are sent to the title insurance company for recording. D) The title search runs right up to the last minute of the escrow recording to ensure that nothing has been inserted in the record. If no changes have occurred, the deed and other instruments are recorded on the following morning. E) On the day the deed is recorded, the escrow agent disburses fund to the parties, according to the signed instructions. The disbursement are as follows : 1. Sellers lender - the amount of the loan and costs remaining at date of recording 2. Listing and selling brokers sales commissions 3. Contractors _ termite work, roof repairs, plumbing and or electrical repairs etc. 4. Other liens against the property are paid F. After recording, the escrow agent presents closing statements to the parties who should receive them G. The title insurance company endeavors to issue a policy of title insurance on the day of the record action H. After that, the recorded deed is sent from the county recorder to the customer.
What is the brokers final duties with regards to escrow?
The broker has a final duty to meet with the buyers or the sellers and explain the closing statement to help them understand all charges and credits on the statement and to verify that they have received the correct amount from escrow or paid the correct amount into escrow.
What are the duties of the buyers in the escrow?
The duties of the buyers in the escrow includes buyers performing in full and paying the purchase price.. They are entitled to a deed transferring title, subject only to the encumbrances agreed by both parties. While the title search is being condiucted, the buyer's deposits are held in escrow.
What are the duties of the lenders in the escrow transaction?
The duties of the lenders in the escrow transaction is to ensure that funds are available to complete the purchase.The escrow agents hold money, checks and other documents until liens have been paid off and clear titles have been confirmed. Therefore, it is the escrow agent's responsiblity to see that the proper disbursements are made.
What are the elements of a preliminary title report?
The elements of a preliminary title report are: 1. A preliminary title report is an offer. 2. it is NOT an abstract of title reporting of a complete chain of title. 3. It is a statement of the terms and conditions of the offer to issue a title policy.
Who holds all the money and documents during the escrow transaction?
The escrow agent holds all money and documents during the transaction.
What does the extended coverage policy offer over and above the standard policy?
The extended coverage policy would also include some of the following: 1. Unrecorded Liens 2. Off-record easements 3. Rights of persons in physical possession, including tenants and buyers under unrecorded instruments 4. Rights and claims that a correct survey or physical inspection would disclose 5. Mining claims 6. Water rights 7. Lack of access 8. NOTE: insurers might require a survey before they issue an extended coverage policy of title insurance.
Who benefits from an ALTA Extended policy?
The one who benefits from an ALTA Extended policy is generally for the benefit of the lender. The buyer pays for this lender protection and insures that the lender has a valid and enforceable lien, subject to exclusions from the coverage noted in the policy. It only ensures the lender for the amount of the loan and NOT the purchase price of the property.
What is the penalty for Failure to Pay the fines and penalties under the broker annual report?
The panalty for not paying the penalty in the late filing of a broker annual report (acting as an escrow) is a suspension or revocation of the license. The penalties go to the Consumer Recovery Account (CRA).
Who are parties to an Escrow?
The parties to an escrow include the buyers, sellers, lenders and brokers.
How much is the penalty for not filing the broker annual report with the BRE?
The penalty for not filing the broker annual report with the BRE is a penalty of $50 per day for the first 30 days and then $100 per day thereafter up to $10,000.
On what basis are the proration of mortgage interest in California?
The proration of mortgage interest in California is made on a true year and on a per diem basis and is based on actual days based on a 365 day year.
On what basis are the proration of taxes made in California?
The proration of taxes in California is made on a "bankers year" which is a 30 day month and a 360 day year.
What are the requirements for a corporation applying for a Department of Corporations (DOC) Escrow Licensure?
The requirements for a corporation applying for the DOC Escrow Licensure are: A) Pay an application fee B) Pass a background check C) meet minimum financial requirements D) Meet minimum experience requirements (managers must have at least 5 years of responsible escrow experience E) Furnish a surety bond for $25,000 - $59,000 F) Arrange for the fidelity bonding of responsible employees (minimum of $125,000 each) G) Be a member of the Escrow Agents' Fidelity Corporation (EAFC) H) Set up a trust fund for all monies deposited in escrow I) Keep accurate records, subject to audit at any time by the Commissioner of Corporations and the Bureau of Real Estate J) Submit to an an independent audit annually at its own expense.
What are the duties of the sellers in the escrow?
The sellers retain legal title to the property as security until they have the money in hand. The seller's legal title usually is transferred by deed. The title is placed in escrow until buyers have produced the full purchase price for the property.
What law simplified closing disclosure requirement of the Truth in Lending Act and RESPA?
The simplified closing disclosure requirement of the Truth and Lending ACT and RESPA was due to Dodd-Frank. The closing disclosure statement includes a detailed accounting of the mortgage transaction, including a breakdown of closing costs by the buyer , the seller and others. This new closing statement replaces the HUD-1 Settlement Statement.
What are the three types of ALTA policies?
The three types of ALTA policies are: 1. One deals with homes described by lot, block number and tract 2. One deals with homes described by either the metes-and-bounds or government survey system 3. One deals with constructions loans
What are the two types of title insurance policies?
The two types of title insurance policies are the California Land Title Association (CLTA) and the American Land Title Association (ALTA) The CLTA is for the benefit of the buyer and the ALTA is for the benefit of the lender and the buyer pays for both. CLTA ensures clear title and ALTA protects the benefit of the lender for the loan of the buyer.
What are Closing Disclosures?
There are certain procedures for closing. Closing statements do not follow usual bookkeeping formulas where credits are deposits to the account and debits are subtracted to the account. In closing, "DEBITS" are amounts owed and "CREDITS" are amounts entitled to be received.
What would be covered in an Extended ALTA policy?
Those items that could be covered in an Extended Coverage ALTA policy are: 1. Extended coverage includes the standard coverage plus: A. Property inspection, included unrecorded rights of persons in possession B. Examination of survey C. Unrecorded liens not known by policyholder
What is Title Insurance?
Title Insurance insures the ownership of real property (land, buildings, and minerals below the surface) against any unknown encumbrances and other items that may cloud the title. These are primarily claims that might be made by a third party against the property. Buyers are assured that a thorough search has been made of all public records affecting the property being purchased and that the buyers have a marketable title.
What closing costs are customarily paid by the SELLER in a Legal Closing?
Typical closing costs customarily paid by the seller are: A) Owner's Title Policy B) Escrow services generally shared by the buyer and seller C) Drawing Deed D) Obtaining reconveyance deed E) Notary fees (typically signing parties pays to notarized) F) Recording reconveyance G) Documentary transfer tax provided by the county and or city who have adopted the tax $0.55 for each $500 or fractional part thereof. Check with the local area for requirements for transfer taxes H) Proration of any property taxes/prepaid rents I) Other charges as necessary
What closing costs are customarily paid by the SELLER under the Financial Closing?
Typical closing costs typically paid by the seller under the financial closing include: A) Mortgage discounts. (Points) B) Appraisal charge for advance loan commitment C) Structural pest control report or structural repair (if needed). Typically inspection reports are paid by the buyer and the structural reports are paid by the seller or it can be negotiable regarding inspection fees. D) Interest on existing loans from last monthly payment to closing date (sellers) E) Beneficiary Statement (balance of existing loan) (seller) F) Loan payoff (first trust deed and or any junior (second) deeds (seller) G)Prepayment penalty (seller) H) Other agreed charges
Who pays for an adjustment for fire insurance?
Typically, a buyer would have an adjustment for prepaid fire insurance paid by the seller. But just beware that this may not happen since insurance is a personal contract between the original owner and the property.
What reserve (impound) limitations by the RESPA regarding variations must be taken into account in the escrow?
Under RESPA Reserve (impound) limitations covered under RESPA with respect to variations are: A) Any variations from custom in closing a transaction should be agreed on in advance by both parties in advance. B) Accruals -unless agreed on in advance, interest bearing debts are accrued up to the date of settlement and constitute a charge against the seller.
What happens when the seller dies before the transaction has been completed?
When a seller dies before the transaction has been completed, that seller's right to the unpaid part of the purchase price may pass on to the heirs.
When are the deeds and monies transferred to the buyer and seller during escrow?
When conditions agreed upon by the buyer and seller are met, the deed and monies involved are disbursed concurrently to the appropriate parties.
What happens to escrow when it is closed?
When escrow is closed, the escrow holder becomes agent for each principal with respect to those things in escrow to which the respective parties have become completely entitled.
Can Purchase Agreements be companies with joint escrow instructions?
Yes, Purchase Agreements combined with joint escrow instructions such as the CAR form California Residential Purchase Agreement and Joint Escrow Instructions.
