Principles 10

Question 1

Escrow

Answer 1

-The possession by a neutral third person of money, a written instrument, evidence of title, or another thing of value that is received from one party to a transaction for delivery to the other party to the transaction on the performance of one or more conditions at a specified time.

Question 2

Close of escrow

Answer 2

• the escrow agent provides each party a settlement statement that itemizes all receipts and disbursements.

Question 3

2 requirements for a Valid Escrow

Answer 3

• Binding Contract

- Conditional Delivery

Question 4

Escrow officer

Answer 4

Someone employed by an escrow company or escrow holder to handle escrow transactions.

Question 5

Proration

Answer 5

• is the allocation of property expenses and other charges to seller or buyer.
• expenses that are prorated include: rents, taxes, insurance premiums, and interest on loans

Question 6

Abstract of title

Answer 6

• Lists every recorded change of ownership or claim on the property being examined
• accompanied by a lawyer’s opinion of title, which comments on the present validity of any claims of lien or ownership

Question 7

Standard policy

Answer 7

• assumes that the policyholder is able to inspect the property before purchase and determine how the land is being used and by whom
• covers FRIC: forgery, recording defects, improper delivery of a document of title, and incapacity of the grantor

Question 8

Extended-coverage policy

Answer 8

-that is intended primarily for the benefit of lenders.

Question 9

Preliminary report

Answer 9

• Describes the property and names the owner of record
• indicates any outstanding taxes, bonds, and assessments
• identifies any conditions and restrictions on the property
• lists any recorded encumbrances or other items that will be exceptions to the title insurance coverage.

Question 10

North vs. South

Answer 10

• Northern California, buyer pays for owner’s title insurance policy
• Southern California, seller pays for owner’s title insurance policy

Question 11

Interpleader

Answer 11

-legal action taken taken by escrow holder to have a court determine the rights of the parties because the parties cannot agree on terms

Question 12

North vs. South handling escrows

Answer 12

• Northern California: escrow is typically handled by the title insurance company
• Southern California: separately licensed escrow companies often are used, and financial institutions also performs many escrow

Question 13

North vs. South escrow instructions

Answer 13

• Northern California: practice unilateral escrow instructions
• Southern California: practice bilateral escrow instructions