Escrow and Closing Questions and Answers Already Passed

Escrow and Closing Questions and Answers Already Passed When the executed escrow instructions differ from the purchase agreement, which of the following is correct? ✔✔The escrow instructions take precedence. The escr ...

Escrow and Closing Questions and Answers Already Passed When the executed escrow instructions differ from the purchase agreement, which of the following is correct? ✔✔The escrow instructions take precedence. The escrow instructions take precedence over all other documents. Escrow agents must: ✔✔- remain neutral by acting as an agent for both buyer and seller. - strictly comply with the escrow instructions. - treat information as confidential. An escrow agent must treat information as confidential, strictly comply with escrow instructions, and remain neutral while representing the interests of all parties with an interest in the transaction. Which of the following are duties performed by an escrow agent if so directed in the escrow instructions? ✔✔- Order the title insurance report and policies. - Disburse funds as authorized by the principals. An escrow agent may disburse funds as directed by the parties and order the title insurance report and policies. An escrow agent may not draft legal documents, even if authorized to do so. The money and documents of a real estate transaction are held in trust until closing by: ✔✔a neutral third party known as the escrow agent. The money and documents are held by an escrow agent. To prorate means to: ✔✔allocate the financial impact of a particular item on the parties as of a particular date. Proration is the process of allocating a sum of money or expense proportionately according to time, interest, and benefit. Escrow terminates: ✔✔- when the transaction closes. - if the buyer and seller mutually agree to terminate the escrow. - if the terms of the escrow instructions have not been fulfilled by the specified closing date. Which of the following charges is generally a debit to the seller on the settlement statement? ✔✔Real estate agent sales commission The seller is generally responsible for real estate sales commission as agreed to in the listing agreement and again in the purchase and sale agreement. When a buyer assumes an existing mortgage, the mortgage balance will appear on the settlement statement as ✔✔a credit to the buyer and a debit to the seller. An assumed loan is a credit to the buyer and a debit to the seller. Escrow agents must report every sale of real property to the Internal Revenue Service. The form used to report the seller's name and social security number is the: ✔✔1099-S. All sales of real estate must be reported to the Internal Revenue Service by the escrow agent. The reporting is done on a IRS Form 1099-S, which sets forth the name and social security number of the seller, along with the gross proceeds of the sale. RESPA requires which of the following for federally related loan transactions? ✔✔- A copy of a booklet about settlement procedures that explains RESPA, closing costs, and the settlement statement. - A Uniform Settlement Statement. A proper escrow, once established, is: ✔✔not subject to the control of any one interested party. A valid escrow is not subject to the control of any one interested party. Items (such as property tax) that have been proportionally allotted on a closing statement as to the financial responsibility of the parties are known as: ✔✔prorations. Prorations apply to any charge that one party to a transaction may have incurred prior to the sale, or to charges that cover a period after the sale. In most cases, the priority of a lien on real property is established by the: ✔✔date of recording. Generally, the date of recording a lien establishes its priority. A bill of sale is used to convey title to: ✔✔When personal property is sold, a bill of sale must be given which transfers title. If a seller has already paid the property taxes for the year, the prepaid taxes will appear on the settlement statement as: ✔✔a credit to the seller and a debit to the buyer. Prepaid taxes are a credit to the seller and a debit to the buyer on the settlement statement. On the HUD-1 Settlement Statement, the purchase price will be listed as: ✔✔a credit to the seller and a debit to the buyer. The purchase price is a credit to the seller and a debit to the buyer. A debit on the buyer's side of the settlement statement: ✔✔is an item that must be paid by the buyer. Not all debits appear on the settlement statement as a credit to the seller. Debits reflect items that must be paid by the buyer. Escrow agents are required to determine whether the seller of property is a U.S. citizen and, if not, withhold 15% of the net proceeds under the provisions of: ✔✔FIRPTA. Under the Foreign Investment in Real Property Tax Act (FIRPTA), the escrow agent must determine if the property seller is a U.S. citizen and, if not, must withhold 15% of the net proceeds of the sale, which must then be forwarded to the IRS within ten days after the closing of the transaction One of the essential requirements for a valid escrow is a binding contract. This may be ✔✔- an exchange agreement. - an option agreement. - a lease agreement. An option agreement, exchange agreement, and lease agreement are binding contracts that may be the reason for opening an escrow. The premium for a title insurance policy purchased by the seller would appear on the settlement statement as: ✔✔a debit to the seller. A title insurance policy purchased by the seller will appear only as a debit to the seller. While a real estate transaction is in escrow, the escrow agent: ✔✔acts only on the express written instructions signed by the parties. The escrow agent may only act on the express written escrow instructions signed by the parties.