Unit 14

In addition to the coverage offered by the standard policy, an ALTA extended-coverage policy of title insurance includes

unrecorded liens; off-record easements; rights of parties in physical possession, including tenants and buyers under unrecorded instruments; rights and claims that a correct survey or physical inspection of the land would show; mining claims; reservations in patents; water rights; and lack of access.

15: Which of the following is CORRECT regarding an extended-coverage policy?

(a)provides coverage only until the loan is paid (b)offers decreasing coverage each year (c)covers unrecorded liens

6: A real estate broker can open an escrow department for their office, but CANNOT

(a)use a name for the escrow company containing the word "escrow." (b)advertise in a manner that would tend to be misleading to the public. (c)advertise that he/she conducts escrows outside of their real estate brokerage business.

14: Which of the following is NOT covered under a standard policy of title insurance?

A standard policy does NOT cover rights of parties in possession (unrecorded deeds, options, leases, etc.) and matters that would be disclosed by making inquiry of persons on the property. (a)lack of capacity of a grantor. (b)failure of delivery of a prior deed. (c)rights of parties in possession. (d)undisclosed spousal interests.

16: An extended coverage policy of title insurance covers all of the following EXCEPT

An ALTA extended-coverage policy of title insurance does NOT cover government regulations such as zoning restrictions. It does cover: (a)defects covered by a standard policy. (c)forged documents. (d)defects that would be revealed by a survey.

11: A history of title showing every recorded document is called a(n)

An abstract of title is a history of title showing every recorded document.

Signed at a later date, the escrow instructions more clearly show the final agreement of the parties.

If a difference exists between the instructions and the purchase agreement, the escrow instructions generally will prevail because,

9: If a dispute arises during an escrow and both buyer and seller make demands on the buyer's deposit, the escrow should

If both buyer and seller claim a deposit when an escrow has terminated, the escrow agent should file an interpleader action asking the courts to determine who has a valid claim to the funds held.

17: Escrows must be licensed by the commissioner of corporations, with the exception of

Escrows must be licensed by the commissioner of corporations, with the exception of banks and savings associations, title insurance companies, attorneys, and real estate brokers. Real estate brokers can serve as escrows on transactions in which they represented either the buyer or the seller, or were a principal.

4: Which of the following is exempt from the licensing requirements of the escrow law?

Exempt from the licensing requirements of the escrow law are: 1. banks and savings associations; 2. title insurance companies; 3. attorneys (attorneys essentially are unregulated unless they operate an escrow company); however, they must have had a bona fide client relationship with one of the parties; and 4. real estate brokers. (This exemption applies only to transactions where the broker was either a principal or the listing or selling agent.)

8: Escrows can be terminated by

Full performance, by completion of the escrow, terminates the escrow. Escrows also can be terminated by the mutual agreement of both the buyer and the seller. In addition, impossibility of performance will terminate an escrow.

Termination of escrow (Page 8)

Full performance, by completion of the escrow, terminates the escrow. Escrows also can be terminated by the mutual agreement of both the buyer and the seller. In addition, impossibility of performance will terminate an escrow.

7: Who would normally be responsible for any material damage to the property by fire or vandalism before close of escrow?

Unless agreed otherwise, the seller retains possession until the close of escrow and thus retains responsibility for damage.

10: Who pays for the escrow services is determined by

Who pays for the escrow services is determined by agreement of the parties to the escrow (buyers and sellers).

5: A broker may act as an escrow on transactions where the broker acted as a(n)

all of the above (a)principal to the transaction. (b)agent of the buyer. (c)agent of the seller.

3: A change in escrow instructions is known as a(n)

amendment.

13: Before issuing a title insurance policy, the title company will indicate exceptions to its coverage by issuing a(n)

preliminary title report.

2: Within one month of closing, brokers must inform the buyer and the seller of the final selling price. In actual practice this is usually not necessary because

the escrow provides this information in the closing statement.

12: A microfilm or computer system showing every document that has been recorded within the county is called a

title plant