Escrow Study Guide – Questions & Solutions
Open Escrow Correct Ans - To name an escrow holder, otherwise
known as an escrow company, or some other eligible person, such as an
attorney, to act as an impartial agent between both buyer and seller.
Escrow Instructions Correct Ans - Are written directions, signed by
a buyer and seller, detailing the procedures necessary to close a transaction
and directing the escrow agent how to proceed.
Fall Out of Escrow Correct Ans - Where one of the parties is unable
to satisfy the conditions of the purchase and the sale contract.
Escrow Holder Correct Ans - Is a neutral third party who is an
agent for buyer and seller.
Buyer Correct Ans - Is the party purchasing the property and the
one who will receive a deed conveying the title.
Seller Correct Ans - Is the owner of record who must deliver the
title agreed upon in the contract.
Escrow Agent Correct Ans - Is an impartial third party who collects
all documents and money, through the escrow, and transfers them to the
proper parties at the close of escrow.
A.L.T.A. Owner's Policy (American Land Title Association) Correct Ans
- An owner's extended title insurance policy. (American Land Title
Association)
A.L.T.A. (American Land Title Association) Title Policy Correct Ans -
A type of insurance policy issued by title insurance companies. It expands
the risks normally insured against under the standard type policy to
include unrecorded mechanic's liens; unrecorded physical easements; facts
a physical survey would not show; water and mineral rights of the parties
in possession, such as tenants and buyers under unrecorded instruments.
Abstract of Judgment Correct Ans - A summary of a court judgment.
,Abstract of Title Correct Ans - Written summary of all useful
documents discovered in a title search.
Acceleration Clause Correct Ans - Clause in a loan document
describing events causing entire loan to come due.
Acceptance Correct Ans - Unqualified agreement to the terms of an
offer.
Acknowledgment Correct Ans - A signed statement, made before a
notary public, by a named person confirming the signature on a document
and that it was made of free will.
Actual Notice Correct Ans - A fact, such as seeing the grant deed, or
knowing a person was willed or inherited a property.
Adjustable Rate Mortgage Correct Ans - A Note whose interest rate
is tied to a movable economic index.
Administrator Correct Ans - A person appointed by the probate
court to administer the estate of a deceased person. Duties include making
an asset inventory, managing the property, paying the debts and expenses,
filing required reports and tax returns, and distributing the assets as
ordered by the probate court.
Affidavit of Title/Ownership Correct Ans -
After-Acquired Title Correct Ans - Any benefits that come to a
property after a sale must fallow the sale and accrue to the new owner.
Agency Correct Ans - A legal relationship in which a principal
authorizes and agent to act as the principal's representative when dealing
with third parties.
Agency Relationship Correct Ans - A special relationship of trust by
which one person (agent) is authorized to conduct business, sign papers, or
otherwise act on behalf of another person (principal).
,Agreement Correct Ans - A mutual exchange of promises (either
written or oral). Although often used as synonymous with contract,
technically it denotes mutual promises that fail as contract for lack of
consideration.
Agreement of Sale Correct Ans - A contract for the sale of real
property where the seller gives up possession , but retains the title until
the purchase price is paid in full. Also called contract for sale or land
contract.
Agricultural Property Correct Ans - Property zoned for the use in
farming, including the raising of crops and livestock.
Air Rights Correct Ans - Rights in real property to the reasonable
use of the air space above the land surface.
Airspace Correct Ans - The interior space in which and apartment,
office or condominiums occupies. Airspace is considered real property to a
reasonable hight. For example, an owner or developer of condominiums
may sell the airspace as real property.
Alienate Correct Ans - To transfer, convey, or sell property to
another. The act of transferring ownership, title, or interest.
Alienate Clause Correct Ans - A clause in a loan document allowing
lender to call the balance of the loan due upon the sale of the property. Also
called the due-on-sale clause.
All-Inclusive Trust Deed (A.I.T.D.) Correct Ans - A purchase money
deed of trust subordinate to- but still including- the original loan.
Amendment Correct Ans - Change to escrow instructions. Any
changes must be made by mutual agreement between buyer and seller. The
escrow agent does not have the authority to make changes in the contract
upon the direction of either the buyer or seller, unless both agree to the
changes, in the form of an amendment. A change to an existing contract by
mutual agreement of the parties.
, Amortization Correct Ans - The liquidation of a financial obligation
on an installment basis.
Amortized Loan Correct Ans - A loan, interest and principal, to be
repaid by a series of regular payments that are equal or nearly equal,
without any special balloon payment prior to maturity. Also called a level
payments loan.
Annual Percentage Rate Correct Ans - The relationship of the total
finance charge to the total amount to be financed as required under the
Truth-in-Lending Act.
Appraisal Correct Ans - An unbiased estimate or opinion of the
property value on a given date.
Appraisal Report Correct Ans - A written statement where an
appraiser gives his or her opinion of value.
Arm's Length Transaction Correct Ans - A transaction such as a sale
of property, in which all parties involved are acting in their own self-
interest and are under no undue influence or pressure from the other
parties.
Assessed Value Correct Ans - Value placed on property by a public
tax assessor as a basis for taxation.
Assessor's Parcel Number (APN) Correct Ans - The official
identification number for a specific property. The assessor, who has the
responsibility of determining assessed value, to determine property tax.
Also referred to as account, folio or UPC number, and appears in legal
property descriptions.
Assignment Correct Ans - The transfer of entire leasehold estate to
a new person.
Assignment of Rents Clause Correct Ans - A clause in a deed of trust
or mortgage, providing that in the event of default, all rents and income
from the secured property will be paid to the lender to help reduce the
Open Escrow Correct Ans - To name an escrow holder, otherwise
known as an escrow company, or some other eligible person, such as an
attorney, to act as an impartial agent between both buyer and seller.
Escrow Instructions Correct Ans - Are written directions, signed by
a buyer and seller, detailing the procedures necessary to close a transaction
and directing the escrow agent how to proceed.
Fall Out of Escrow Correct Ans - Where one of the parties is unable
to satisfy the conditions of the purchase and the sale contract.
Escrow Holder Correct Ans - Is a neutral third party who is an
agent for buyer and seller.
Buyer Correct Ans - Is the party purchasing the property and the
one who will receive a deed conveying the title.
Seller Correct Ans - Is the owner of record who must deliver the
title agreed upon in the contract.
Escrow Agent Correct Ans - Is an impartial third party who collects
all documents and money, through the escrow, and transfers them to the
proper parties at the close of escrow.
A.L.T.A. Owner's Policy (American Land Title Association) Correct Ans
- An owner's extended title insurance policy. (American Land Title
Association)
A.L.T.A. (American Land Title Association) Title Policy Correct Ans -
A type of insurance policy issued by title insurance companies. It expands
the risks normally insured against under the standard type policy to
include unrecorded mechanic's liens; unrecorded physical easements; facts
a physical survey would not show; water and mineral rights of the parties
in possession, such as tenants and buyers under unrecorded instruments.
Abstract of Judgment Correct Ans - A summary of a court judgment.
,Abstract of Title Correct Ans - Written summary of all useful
documents discovered in a title search.
Acceleration Clause Correct Ans - Clause in a loan document
describing events causing entire loan to come due.
Acceptance Correct Ans - Unqualified agreement to the terms of an
offer.
Acknowledgment Correct Ans - A signed statement, made before a
notary public, by a named person confirming the signature on a document
and that it was made of free will.
Actual Notice Correct Ans - A fact, such as seeing the grant deed, or
knowing a person was willed or inherited a property.
Adjustable Rate Mortgage Correct Ans - A Note whose interest rate
is tied to a movable economic index.
Administrator Correct Ans - A person appointed by the probate
court to administer the estate of a deceased person. Duties include making
an asset inventory, managing the property, paying the debts and expenses,
filing required reports and tax returns, and distributing the assets as
ordered by the probate court.
Affidavit of Title/Ownership Correct Ans -
After-Acquired Title Correct Ans - Any benefits that come to a
property after a sale must fallow the sale and accrue to the new owner.
Agency Correct Ans - A legal relationship in which a principal
authorizes and agent to act as the principal's representative when dealing
with third parties.
Agency Relationship Correct Ans - A special relationship of trust by
which one person (agent) is authorized to conduct business, sign papers, or
otherwise act on behalf of another person (principal).
,Agreement Correct Ans - A mutual exchange of promises (either
written or oral). Although often used as synonymous with contract,
technically it denotes mutual promises that fail as contract for lack of
consideration.
Agreement of Sale Correct Ans - A contract for the sale of real
property where the seller gives up possession , but retains the title until
the purchase price is paid in full. Also called contract for sale or land
contract.
Agricultural Property Correct Ans - Property zoned for the use in
farming, including the raising of crops and livestock.
Air Rights Correct Ans - Rights in real property to the reasonable
use of the air space above the land surface.
Airspace Correct Ans - The interior space in which and apartment,
office or condominiums occupies. Airspace is considered real property to a
reasonable hight. For example, an owner or developer of condominiums
may sell the airspace as real property.
Alienate Correct Ans - To transfer, convey, or sell property to
another. The act of transferring ownership, title, or interest.
Alienate Clause Correct Ans - A clause in a loan document allowing
lender to call the balance of the loan due upon the sale of the property. Also
called the due-on-sale clause.
All-Inclusive Trust Deed (A.I.T.D.) Correct Ans - A purchase money
deed of trust subordinate to- but still including- the original loan.
Amendment Correct Ans - Change to escrow instructions. Any
changes must be made by mutual agreement between buyer and seller. The
escrow agent does not have the authority to make changes in the contract
upon the direction of either the buyer or seller, unless both agree to the
changes, in the form of an amendment. A change to an existing contract by
mutual agreement of the parties.
, Amortization Correct Ans - The liquidation of a financial obligation
on an installment basis.
Amortized Loan Correct Ans - A loan, interest and principal, to be
repaid by a series of regular payments that are equal or nearly equal,
without any special balloon payment prior to maturity. Also called a level
payments loan.
Annual Percentage Rate Correct Ans - The relationship of the total
finance charge to the total amount to be financed as required under the
Truth-in-Lending Act.
Appraisal Correct Ans - An unbiased estimate or opinion of the
property value on a given date.
Appraisal Report Correct Ans - A written statement where an
appraiser gives his or her opinion of value.
Arm's Length Transaction Correct Ans - A transaction such as a sale
of property, in which all parties involved are acting in their own self-
interest and are under no undue influence or pressure from the other
parties.
Assessed Value Correct Ans - Value placed on property by a public
tax assessor as a basis for taxation.
Assessor's Parcel Number (APN) Correct Ans - The official
identification number for a specific property. The assessor, who has the
responsibility of determining assessed value, to determine property tax.
Also referred to as account, folio or UPC number, and appears in legal
property descriptions.
Assignment Correct Ans - The transfer of entire leasehold estate to
a new person.
Assignment of Rents Clause Correct Ans - A clause in a deed of trust
or mortgage, providing that in the event of default, all rents and income
from the secured property will be paid to the lender to help reduce the
