Book : California Real Estate Practice [Third Edition] By Robert L. Herd and Bruce A. Southstone
Chapter 11 : Escrow and Title insurance
Class Discussion Topics
1. Who customarily pays for the CLTA policy in your area?
2. Obtain a fee schedule from your local title and escrow company and be prepared to tell the class what the escrow fee would be for
a $400,000 sale. What would the ALTA lender’s policy be for a $300,000 loan on the same property?
3. If an escrow fails, do title companies in your area customarily charge the buyer a fee for the preliminary title report?
4. If the property taxes for a home are $3,000 per year, the seller paid the first installment, and escrow closed on November 30, would the seller receive a credit or a debit as a proration on the escrow closing statement? If so, how much?
5. What sort of rebate or item of value can a broker receive from an escrow company for referring business? Why?
6. If a wife quitclaimed her interest in a property to her husband and several years later they divorced, would the title company require
a new quitclaim deed? Why?
7. Why must the escrow remain neutral to all parties?
Chapter 12 Quiz
1. No escrow company may
a. disseminate misleading or deceptive statements referring to its supervision by the state of California.
b. describe either orally or in writing any transaction that is not included under the definition of escrow in the California Financial Code.
c. pay referral fees to anyone except a regular employee of its own escrow company.
d. do all of the above.
2. What are escrow officers legally required to do?
a. Act according to issued written instructions.
b. Act on behalf of one party only.
c. Follow escrow instructions in every detail even if the instructions are in violation of the law.
d. Give each party all information they have about the other party.
3. What is/are the major advantage(s) of using an escrow?
a. To ensure net proceeds are delivered to the buyer.
b. To ensure that the sale price is debited to the seller side of the ledger.
c. To convey the buyer’s earnest money deposit to the parties.
d. To ensure handling of accounting details in a professional manner.
4. Escrow instructions
a. are the written directions from the principals to the impartial third party to do all the necessary acts to carry out the escrow agreement of the principals.
b. are not binding until they are signed by at least one of the principals.
c. may be altered by either principal within ten days after opening of the escrow.
d. may not be prepared by a real estate broker if she represents the buyer or seller.
5. Which of the following recurring costs can be included in an escrow?
a. Referral fees from title company to broker.
b. Finder fees to licensee.
c. Pest control company referral to broker.
d. Prorated interest on any new financing.
6. What is an abstract of title?
a. It is a document that provides the buyer more protection than title insurance.
b. It is a summary of all instruments affecting title to real property as shown by the public records.
c. It reveals title defects such as forged instruments and failure of delivery of title documents.
d. It is a summary of most of the recorded documents concerning a property.
7. A CLTA or standard policy covers all of the following non-recorded items except
a. lack of capacity of a grantor.
b. federal estate tax liens.
c. water rights.
d. deeds of a corporation whose charter has expired.
8. An ALTA policy is also known as a(n)
a. plain coverage policy.
b. limited exclusion policy.
c. CLTA policy.
d. extended policy.
9. Which of the following is true of a preliminary title report?
a. It is a commitment by a title insurance company to issue a title insurance policy.
b. It is a policy binding on the title company as soon as it is received by the principals.
c. It lists the defects, liens, restrictions, and encumbrances that would be excluded from coverage if the requested title insurance policy was issued on the day of the report.
d. It must be issued within three calendar days after requested by the escrow officer.
10. Which of the following is not true of a preliminary title report?
a. It is an offer to insure title.
b. It is an abstract of title reporting a complete chain of title.
c. It is a statement of the terms and conditions of the offer to issue a title policy.
d. None of the above.