© 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 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 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 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 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 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 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

© 2011 Cengage Learning ESCROW 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 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 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 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 Discuss the various buyer and seller closing costs that are normally a part of an escrow. recurring costs and non-recurring costs differences Escrow closing procedures

© 2011 Cengage Learning TITLE INSURANCE Abstract of title and title insurance differences benefit of one over the other

© 2011 Cengage Learning TITLE INSURANCE 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 differences items are not covered by either title policy.

© 2011 Cengage Learning TITLE INSURANCE Preliminary title report 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 Special title insurance policies construction lender policies, etc. RESPA limitations on rebates of any kind and the fines and imprisonment that can be given to offenders.