Question 1

Deed delivery in an escrow is accomplished by
A) the escrow holder accepting the deed on behalf of the grantee.
B) delivery of the deed by the escrow holder to the grantor.
C) a courier service.
D) the title company.

Accepted Answer

Deed delivery in an escrow is accomplished by the escrow holder accepting the deed on behalf of the grantee.

Question 2

Of the following, the final action to be taken to complete a closing is
A) acknowledgement of all instruments.
B) recordation of appropriate instruments.
C) signing of the deed.
D) title search.

Accepted Answer

Recordation of appropriate instruments would be the final action taken to complete a closing.

Question 3

A seller received a net amount of $29,817 after paying off a $53,000 loan balance, $1,213 in miscellaneous costs, and a 7% brokerage fee. What was the sale price of the house? (round to nearest dollar)
A) $77,020
B) $84,030
C) $90,355
D) $90,360

Accepted Answer

The seller received 29,817 + 53,000 + 1,213 (84,030). This was 93% of the sales price. So 84,030/.93 = 90,355 (rounded).

Question 4

All of the following items are usually paid by the seller at the close of a residential sale escrow EXCEPT
A) title search.
B) appraisal fee.
C) commission.
D) title insurance.

Accepted Answer

This is almost always paid by the buyer prior to closing.

Question 5

A buyer agreed to put down $5,000 as earnest money toward a house he was buying for $97,000. The offer was based upon receipt of an 80% loan from a bank. The attorney's fees were $2,000 and all other buyer costs amounted to $1,500. How much money will the buyer need to pay at settlement?
A) $14,400
B) $17,900
C) $17,700
D) $22,900

Accepted Answer

The buyer has agreed to pay $97,000 but the lender will supply 80% or $77,600;so the down payment is 97,000 - 77,600 = 19,400. Add to that $2,000 and $1,500 in expenses but subtract $5,000 because he has already deposited that much as earnest money;
19,400 + 2,000 + 1,500 - 5,000 = 17,900.

Question 6

The proration of prepaid condominium association dues will result in a
A) charge to the seller and credit to the buyer.
B) charge to the buyer and credit to the seller.
C) charge to the seller and credit to the association.
D) charge to the association and credit to the buyer.

Accepted Answer

The proration of prepaid condominium association dues will result in a charge to the buyer and credit to the seller.

Question 7

For what price must a house sell if the seller is to net $30,000 after paying $1,500 in settlement and the broker's commission of 6% (rounded to the nearest dollar)?
A) $30,000
B) $32,011
C) $32,300
D) $33,511

Accepted Answer

After paying a 6% commission the seller had 30,000 + 1,500 left. So 31,500 (30,000 + 1,500)is 94% of the sales price. So 31,500/.94 = 33,511 (rounded).

Question 8

A disinterested party representing both buyer and seller in a real estate sale is the
A) broker.
B) salesperson.
C) escrow agent.
D) attorney-in-fact.

Accepted Answer

A disinterested party representing both buyer and seller in a real estate sale is the escrow agent.

Question 9

A seller received $81,000 at the close of escrow after paying $1,750 in closing costs and a 6% brokerage fee. What was the sales price of the house?
A) $82,750
B) $87,480
C) $89,230
D) $88,032

Accepted Answer

After paying a 6% commission the seller had 81,000 + 1,750 left. So 82,750 (81,000 + 1,750)is 94% of the sales price. So 82,750/.94 = 88,032 (rounded).

Question 10

On the day of closing a real estate sale, existing property taxes and insurance are
A) left as is.
B) paid by the bank out of the reserves.
C) prorated.
D) paid in full by the seller.

Accepted Answer

Existing property taxes and insurance are prorated on the day of closing a real estate sale.

Question 11

A couple buys a house complete with furnishings. They assume and agree to pay the existing mortgage. All of the following documents should be used in closing EXCEPT
A) note and mortgage.
B) assumption papers.
C) bill of sale.
D) closing instructions.

Accepted Answer

In an assumption a note and mortgage are already in place.

Question 12

The property tax year runs from January 1 through December 31. The taxes on a certain house are $1,440 this year and have not yet been paid. If the house sells and the closing date is December 10ᵗʰ, the
A) buyer owes the seller $82.85.
B) buyer owes the seller $1,357.15.
C) seller owes the buyer $82.85.
D) seller owes the buyer $1,357.15.

Accepted Answer

Since taxes are paid in arrears, the seller owes the buyer. The number of days through December 10 is 344. The daily rate (1,440 / 365)× number of days (344)= 1,357.15.

Question 13

Escrow accounts are opened for the protection of the interests of the
A) general public.
B) seller.
C) buyer and seller.
D) buyer.

Accepted Answer

Escrow accounts are opened for the protection of the interests of the buyer and seller.

Question 14

The home was sold on July 18. The next payment date is August 1. The buyer agreed to assume the seller's 6% loan which has a balance of $36,800 as of July 1. Interest on this loan would be prorated as
A) debit buyer $77.16 and credit seller $106.84.
B) debit seller $77.16 and credit buyer $106.84.
C) credit seller $106.84 and charge buyer $106.84.
D) credit buyer $106.84 and charge seller $106.84.

Accepted Answer

Interest is paid in arrears so the seller owes the buyer. The daily rate calculation is: 36,800 × .06 / 12 / 31 = 5.9355 times number of days (18)= 106.84.

Question 15

The property tax year runs from January 1 to December 31. The taxes on a certain house are $1,440 this year, none of which has been paid. If the house sells, not in a leap year, and the closing date is June 12, the
A) buyer owes the seller $796.93.
B) buyer owes the seller $643.07.
C) seller owes the buyer $796.93.
D) seller owes the buyer $643.07.

Accepted Answer

Since the taxes are paid in arrears, the seller owes the buyer. The number of days from January 1 through June 12 is 163. The daily rate is 1,440 / 365 = 3.9452 × 163 (no.of days)= 643.07.

Question 16

If an existing escrow is to be canceled, it must be done
A) only by the buyer.
B) by mutual rescission.
C) by either party.
D) only by the seller.

Accepted Answer

If an existing escrow is to be canceled, it must be done by mutual rescission.

Question 17

A seller has agreed to pay 80% of the title insurance company's fee on a sale. The company charges $550 for the title policy, plus $95.50 for the title search and $50 for processing the papers. What is the difference between what the seller has to pay and what the buyer has to pay?
A) 20%
B) $139.10
C) $417.30
D) $556.40

Accepted Answer

Seller has to pay: 550 + 95.50 + 50 = 695.50 × .80 = 556.40. Buyer has to pay 695.50 - 556.40 = 139.10. The difference is 417.30.

Question 18

Pat bought a home for $75,000. He put up $5,000 earnest money and secured an 80% loan. The bank charged four points and a 2.5% loan fee. Pat received a $900 credit from the proration of taxes. How much cash will he need to bring to close this transaction?
A) $13,000
B) $13,900
C) $13,975
D) $18,000

Accepted Answer

Pat has agreed to pay $75,000 but the lender will supply 80% or $60,000;so the down payment is 75,000 - 60,000 = 15,000. Add to that 60,000 × .025 or 1,500 in loan fees and 60,000 × .04 or 2,400 as points and subtract 900 (tax credit)and subtract $5,000 because he has already deposited that much as earnest money;15,000 + 1,500 + 2,400 - 900 - 5,000 = 13,000.

Question 19

A 9% amortized loan with a November 1 balance of $40,000 requires the payment of principal and interest at the first of each month. If prorating is done as of the 20ᵗʰ of November, the
A) buyer owes the seller $100.
B) buyer owes the seller $200.
C) seller owes the buyer $100.
D) seller owes the buyer $200.

Accepted Answer

The monthly interest is 40,000 × .09 / 12 = 300 or 300 / 30 =10 per day. So the seller would owe the buyer 20 × 10 = 200 since the buyer will have to pay for the whole month of November on December 1.

Question 20

How many days are normally needed to close a residential sale that requires no financing?
A) 1 to 29
B) 30 to 60
C) 61 to 90
D) over 90

Accepted Answer

Less than 30 days are normally needed to close a residential sale that requires no financing.

Quiz 15: Title Closing and Escrow

Deed delivery in an escrow is accomplished by

Of the following, the final action to be taken to complete a closing is

A seller received a net amount of $29,817 after paying off a $53,000 loan balance, $1,213 in miscellaneous costs, and a 7% brokerage fee. What was the sale price of the house? (round to nearest dollar)

All of the following items are usually paid by the seller at the close of a residential sale escrow EXCEPT

A buyer agreed to put down $5,000 as earnest money toward a house he was buying for $97,000. The offer was based upon receipt of an 80% loan from a bank. The attorney's fees were $2,000 and all other buyer costs amounted to $1,500. How much money will the buyer need to pay at settlement?

The proration of prepaid condominium association dues will result in a

For what price must a house sell if the seller is to net $30,000 after paying $1,500 in settlement and the broker's commission of 6% (rounded to the nearest dollar) ?

A disinterested party representing both buyer and seller in a real estate sale is the

A seller received $81,000 at the close of escrow after paying $1,750 in closing costs and a 6% brokerage fee. What was the sales price of the house?

On the day of closing a real estate sale, existing property taxes and insurance are

A couple buys a house complete with furnishings. They assume and agree to pay the existing mortgage. All of the following documents should be used in closing EXCEPT

The property tax year runs from January 1 through December 31. The taxes on a certain house are $1,440 this year and have not yet been paid. If the house sells and the closing date is December 10ᵗʰ, the

Escrow accounts are opened for the protection of the interests of the

The home was sold on July 18. The next payment date is August 1. The buyer agreed to assume the seller's 6% loan which has a balance of $36,800 as of July 1. Interest on this loan would be prorated as

The property tax year runs from January 1 to December 31. The taxes on a certain house are $1,440 this year, none of which has been paid. If the house sells, not in a leap year, and the closing date is June 12, the

If an existing escrow is to be canceled, it must be done

A seller has agreed to pay 80% of the title insurance company's fee on a sale. The company charges $550 for the title policy, plus $95.50 for the title search and $50 for processing the papers. What is the difference between what the seller has to pay and what the buyer has to pay?

Pat bought a home for $75,000. He put up $5,000 earnest money and secured an 80% loan. The bank charged four points and a 2.5% loan fee. Pat received a $900 credit from the proration of taxes. How much cash will he need to bring to close this transaction?

A 9% amortized loan with a November 1 balance of $40,000 requires the payment of principal and interest at the first of each month. If prorating is done as of the 20ᵗʰ of November, the

How many days are normally needed to close a residential sale that requires no financing?