Instructions: Circle your response and go to Appendix B to read the complete explanation for each question.
1. Escrow instructions must be: a. chartered.
b. executed. c. notarized. d. recorded.
2. The reason for using an escrow when a deed of trust is conveyed is to: a. comply with the Civil Code.
b. ensure that the conditions and instructions of the agreement are satisfied. c. allow for recordation of the deed.
d. provide for third-party liability.
3. Which of the following best describes “complete” escrow? a. It is equivalent to a “perfect” escrow.
b. The escrow holder has ceased being an agent for both parties. c. All escrow instructions have been carried out.
d. All services of the escrow holder are involved.
4. Which of the following statements concerning escrow is correct?
a. A “perfect” escrow exists when the buyer’s closing statement and the seller’s closing statement are exactly identical.
b. In order for the escrow to be able to close, the buyer may be required to pay more than the amount stated in the escrow instructions.
c. The amount in the final closing statement must be the same as the amount in the escrow instructions.
5. Which of the following statements regarding escrow procedures is correct?
a. A broker may hold an escrow for compensation for other parties if the broker has no interest in the transaction.
b. When the escrow requirements have been met, the escrow agency changes from being agent of both parties to an agent of each party.
c. When the escrow holder is in possession of a binding contract between the buyer and seller, it is said to be a complete escrow.
d. The escrow officer acts as an arbitrator of disputes between buyer and seller. 6. An escrow agent is authorized to:
a. give the buyer advice about available financing.
b. change the escrow instructions when asked to do so by the listing broker. c. call for funding of the buyer’s loan.
d. authorize a pest control company to make corrective repairs.
7. If an escrow holder receives pest control reports from two different companies the escrow officer should:
a. submit the estimate requiring the most work.
b. contact both inspectors and determine which of the two reports should be accepted.
c. contact the broker to ask for instructions from the buyer and seller. d. contact the broker to ask for instructions from the seller.
8. Which of the following items would most likely appear as a credit in the seller’s closing statement?
a. Prepaid taxes
b. Delinquent assessment lien c. An assumed loan
d. Title insurance premium
9. If a buyer assumes an existing loan when purchasing a single-family residence, the settlement statement at close of escrow would show the assumption of the loan as:
a. a debit to the buyer. b. a debit to the seller. c. a credit to the lender. d. neither a credit nor a debit.
10. How would the purchase price of a residence appear on the buyer’s closing statement? a. Credit to buyer, debit to seller
b. Debit to buyer, credit to seller c. Credit to buyer
d. Debit to buyer
11. Which of the following is regarded as a recurring cost in a closing statement? a. Escrow fees
b. Recording fees c. Impound accounts
d. Premiums for title insurance
12. While conducting a title search, a title company might examine the documents in the _________office.
a. County Clerk’s b. Federal Land c. County Recorder’s d. All of the above 13. An abstract of title is a(n):
a. brief description of the subject property.
b. summary of all facts regarding evidence of title. c. guarantee of the validity of the title to property. d. informal description of the vesting.
14. A buyer who wishes to insure title to real property when it is purchased should secure a(n):
a. guarantee of title. b. abstract of title. c. certificate of title. d. title insurance policy.
15. A.L.T.A. title insurance exceeds the protection afforded by a C.L.T.A. standard policy in guarding against:
a. errors in the sequence of recording deeds of trust.
b. deeds of reconveyance issued by a minor or a person not capable to make the transaction.
c. relocation of property lines as a result of a formal survey. d. existing easements and liens shown in public records.
16. Which of the following title insurance policies protects against all risks? a. Standard policy
b. Extended policy c. A.L.T.A. policy
d. No policy insures against all risks.
17. Buyer Taylor purchased a parcel of real property and received a standard policy of title insurance. Taylor would be protected against all of the following except:
a. the grantor’s lack of mental capacity.
b. forgery of the grantor’s signature on the deed.
c. easements and liens on the property not shown by public records.
d. the delivery of a deed in the chain of title without actual intent to convey title. 18. When buying a home, a purchaser was given a grant deed and a standard policy of
title insurance. Which of the following is warranted by the seller but is not covered by the standard policy of title insurance?
a. The grantor is legally competent. b. The grantor actually signed the deed.
c. The grantor has placed no undisclosed liens against the property. d. There are no forged deeds in the chain of title.
19. The standard policy of title insurance represents the final result of three successive processes. Which of the following would not be considered one of the processes?
a. Examination and investigation of title b. Determination of the amount of insurance c. Protection of the insured against loss of title
d. Determination of the correct boundary lines by a survey of the insured property 20. Which of the following is not covered by title insurance?
a. A zoning ordinance, regulation, or plan
b. Loss due to a missing signature of a spouse on a deed to community property c. Unpaid county property tax not shown in the policy
d. Incompetence of a former seller
21. Which system of land description employs meridians and baselines? a. Metes and bounds
b. Rectangular survey system c. Subdivision system
22. County governments levy taxes through: a. property taxes.
b. special assessments. c. transfer taxes. d. all of the above.
23. An example of an ad valorem tax would be: a. income tax.
b. estate tax. c. bridge toll. d. property tax.
24. How do special property tax assessments differ from annual property tax assessments? a. Annual assessments have priority over special assessments.
b. Special assessments are imposed only by local authorities. c. Judicial foreclosure is required for unpaid special assessments. d. Special assessments provide for local improvements.
25. After a property is declared tax-defaulted for failure to pay property taxes, the occupant of the property:
a. must vacate immediately.
b. must pay rent to the State of California.
c. may continue to reside on the property unhindered. d. is freed of tax obligations immediately.