Transcript Chapter Twelve - OnCourse Publishing

© 2011 Cengage Learning
Escrow and Title
Insurance
Chapter 12
© 2011 Cengage Learning
RATIONALE FOR CHAPTER
Nearly all real estate sales transactions
involve the use of an escrow. This
chapter gives you an excellent working
knowledge of the benefits of an escrow
to the parties involved in the sale of a
property, including the principals,
brokers, agents, lenders and other
professionals.
© 2011 Cengage Learning
Focus of Presentation
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This chapter will teach students what an
escrow is, escrow requirements and
responsibilities, who can be an escrow
and who the parties to an escrow are.
You will learn how northern and
southern California differ in the way an
escrow is conducted, and coordinated
with the issuance of a title insurance
policy.
© 2011 Cengage Learning
Focus of Presentation
•
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This chapter explains escrow procedures,
the value and use of written escrow
instructions and the duties and
responsibilities of a broker who acts an
escrow.
You will gain an understanding of credits
and debits and how they are assigned to
each party on the escrow closing
statement.
Also a look at broker’s duty to explain the
escrow function to the buyers and sellers.
© 2011 Cengage Learning
CHAPTER TWELVE
OUTLINE
12.1 ESCROW
12.2 TITLE INSURANCE
© 2011 Cengage Learning
ESCROW
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Where the term escrow came from.
Meaning of the term escrow as it is
defined by the California Financial
Code.
Agency capacity of an escrow.
© 2011 Cengage Learning
ESCROW
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Why an escrow has become the vehicle
of choice for real estate transfers.
Different methods used to transfer
property in the United States.
Responsibilities of the escrow agent.
© 2011 Cengage Learning
ESCROW
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Discuss the responsibilities of the
broker(s) in conducting an escrow.
Discuss the parties to an escrow and
how each of them benefits from the use
of an escrow.
Discuss who or what entities must be
licensed to conduct an escrow in
California, and who are exempt.
© 2011 Cengage Learning
ESCROW
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Describe the difference between who
handles an escrow in northern California
as compared to southern California.
Discuss the broker’s exemption from
licensing as an escrow agent and when
the exemption applies.
Escrow licensing requirements
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ESCROW
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Laws governing escrow agents
Duties and limitations placed on escrow
officers
Using figure 12.3 in the text page 351,
discuss the duties, responsibilities and
procedures of an escrow.
© 2011 Cengage Learning
ESCROW
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Steps that must be taken when opening
an escrow.
Importance of giving proper and
complete escrow instructions, and the
difference as to when they are given in
northern California and southern
California.
© 2011 Cengage Learning
ESCROW
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What information must be given to the
escrow agent in order to complete the
escrow?
Procedures for closing an escrow.
Refer to the common escrow documents
in the text, page 355, and give a brief
description of each one and its use.
© 2011 Cengage Learning
ESCROW
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Discuss the duties of the title insurance
company in conducting a thorough
search of the county records for items
that are recorded against the buyer and
the seller, and what is done if a principal
feels that an item listed as a lien against
him or her should not be there.
Common escrow transaction terms
© 2011 Cengage Learning
ESCROW
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Discuss the various buyer and seller
closing costs that are normally a part of
an escrow.
recurring costs and non-recurring costs
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differences
Escrow closing procedures
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TITLE INSURANCE
Abstract of title and title insurance
differences
benefit of one over the other
© 2011 Cengage Learning
TITLE INSURANCE
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Discuss the title insurance policies that
are issued if the buyer is financing the
property (CLTA owner’s policy and
ALTA lender’s policy) .
Standard coverage and extended
coverage
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differences
• items are not covered by either title policy.
© 2011 Cengage Learning
TITLE INSURANCE
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Preliminary title report
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when issued, what is its function and what
its legal limitations are?
Broker’s duty to read the preliminary
title report and report anything that is
out of order.
© 2011 Cengage Learning
TITLE INSURANCE
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Special title insurance policies
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construction lender policies, etc.
RESPA limitations on rebates of any
kind and the fines and imprisonment
that can be given to offenders.
© 2011 Cengage Learning