Chapter 3

Question 1

Why foreal estate companies use a closing check list?

Answer 1

To make sure all details of the closing have been covered and all pertinent documents are in house ready for buyers and sellers to sign

Question 2

What is the difference between a face to face closing and closing in escrow?

Answer 2

The procedure of closing in escrow is basically the same as face to face closing except all documents are sent to an escrow agent

Question 3

What is escrow?

Answer 3

The process in which a disinterested third party holds all money and documents relating to a transaction until all the terms and conditions of the escrow instructions have been satisfied

Question 4

List 3 activities that take place during the escrow period?

Answer 4

1. Getting an appraisal
2. Ordering pest control and other inspection reports
3. Obtaining property insurance
4. Order complete title search and insurance
5. Arranging and approving financing
6. Getting all paperwork in order

Question 5

A seller is required to deliver a marketable title at closing. The bank will require the title search to reveal:

Answer 5

1. Legal description of the property
2. Owners of record
3. Any outstanding liens or encumbrances on the property

Question 6

What are some examples of items the title company will protect the policy holder against losses that arise from such huddle defects with an insurance policy?

Answer 6

1. Forced documents (deeds/mortgages)
2. Undisclosed heirs
3. Mistaken legal interpretation of will
4. Misfiled documents
5. Confusing arising from similarity of names
6. Incorrectly stated marital status
7. Mental incompetence

Question 7

What does say survey do?

Answer 7

Shows footprint of the house and any deck, patio, garage or carport. Shows any building property fences or swimming pool

Question 8

Any problem found with either the physical layout of the property or in the title search results creates a what?

Answer 8

Cloud in title that must be resolved prior to closing on the loan

Question 9

What might borrowers have to file in order to remove the fault of title so the loan process can move forward?

Answer 9

A suit to quiet title

Question 10

What are some examples of a cloud in title?

Answer 10

Mechanics lien
Income tax lien
Property tax lien
Encroachment
Zoning violation
Deed problems

Question 11

What is the difference between the two forms of home insurance available?

Answer 11

HO-2: lists what is covered

HO-3: lists what’s excluded

Question 12

This clause required that the homeowner have insurance that is equal to 80% of the homes replacement value

Answer 12

Coinsurance clause

Question 13

What does a title search reveal

Answer 13

Legal description of the property
The owners of record
Any outstanding liens or encumbrances on property

Question 14

What happens if any problem is found with either the physical layout of the property or in the title search results?

Answer 14

It creates a cloud on the title that must be resolved prior to closing on the loan

Question 15

What is an HO-2 policy?

Answer 15

A basic homeowners property insurance

Question 16

What does a coinsurance clause required?

Answer 16

This clause required that the homeowner have insurance that is equal to 80% of the homes replacement value. This does not include the price of the land

Question 17

Buildings with three or more dwelling units, commercial buildings, and industrial buildings must have what?

Answer 17

A certificate of occupancy (C of O)

Question 18

When do most of the important activities regarding a closing happen?

Answer 18

During the period between the signing of the agreement of sale and the actual closing date

Question 19

Lost three things a licensed should do to help facilitate a closing

Answer 19

1. Check with lender to see how loan approval is coming along
2. Check the appraisal results and help the client decide how to proceed if it comes in low
3. Keep track of any special provisions included in the sale, such as items of personal property

Question 20

What can a lender require a borrower to do with regard to taxes and insurance and why would the lender make this requirement

Answer 20

Lenders can require the borrower to maintain and escrow account for property taxes and insurance so that the lender is sure money will be available for the payments

Question 21

Lost three things a buyer may want to do during escrow period

Answer 21

Have a complete inspection done
Find out the results of appraisal
Find out if the title search revealed any problems that could affect the closing

Question 22

Settlement is also refereed to as

Answer 22

Title closing - culmination of real estate transaction

Question 23

Transfers the property from seller to buyer

Answer 23

The deed

Question 24

Transfers all the personal property that is being sold along with the house

Answer 24

The bill of sale

Question 25

A sworn, notarized statement by the seller confirming ownership of the property and describing any known title defects such as leases, liens, or work on the property that could potentially create liens, boundary line disputes, or outstanding contracts for the sale of the property

Answer 25

The affidavit of title or sellers affidavit

Question 26

Shows all the monetary transfers between the seller and buyer

Answer 26

Buyer/seller settlement statement

Question 27

Provides evidence of the borrowers debt to the lender, a description of the loan, and a means for the lender to transfer or collect debt

Answer 27

The note

Question 28

The buyers agreement to put the property up as collateral for the loan

Answer 28

Mortgage

Question 29

Prepared by the lender if the borrower is assuming current sellers loan

Answer 29

Mortgage deducting certificate

Question 30

Form the borrower completed when he or she first applied for the loan

Answer 30

Loan application.

Question 31

Standardized explanation of the financial terms of the loan

Answer 31

Truth in lending discloser (TILA)

Question 32

Is it legal requirement for a deed to be recorded in the county clerks office?

Answer 32

No, it is not a must but it's a good idea to offset any future problems

Question 33

What does a bill of sale do

Answer 33

Transfers all personal property that is being sold along with the house

Question 34

When is a mortgage certificate used and what does it show

Answer 34

The mortgage reduction certificate is used if the buyer is assuming the current sellers loan and shows the exact amount of the balance as the closing date, the interest rate, and the date of the last payment

Question 35

What is proration

Answer 35

The dividing up of a bill or expense that both the seller and the buyer owe some portion of

Question 36

When dies the title to the property actually transfer

Answer 36

When the deed is delivered and accepted by the buyer

Question 37

Typically when does a purchaser receive the original deed and the title insurance policy?

Answer 37

Several weeks after the closing

Question 38

N order to protect their interest Ina a property, lenders typically require title insurance and

Answer 38

Home owners insurance