© 2011 Cengage Learning. Escrow and Title Insurance Chapter 12 © 2011 Cengage Learning.

Escrow and TitleEscrow and TitleInsuranceInsurance

Chapter 12Chapter 12



RATIONALE FOR CHAPTERRATIONALE 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.


Focus of PresentationFocus 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.


Focus of PresentationFocus 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.


CHAPTER TWELVE CHAPTER TWELVE OUTLINEOUTLINE

12.1 ESCROW12.2 TITLE INSURANCE


ESCROWESCROW

• 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.


ESCROWESCROW

• 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.


ESCROWESCROW

• 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.


ESCROWESCROW

• 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


ESCROWESCROW

• 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.


ESCROWESCROW

• 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.


ESCROWESCROW

• 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.


ESCROWESCROW

• 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


ESCROWESCROW

• 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


TITLE INSURANCETITLE INSURANCE

Abstract of title and title insurancedifferences

benefit of one over the other



• 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.



• 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.



• 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.

© 2011 Cengage Learning. Escrow and Title Insurance Chapter 12 © 2011 Cengage Learning.

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Transcript of © 2011 Cengage Learning. Escrow and Title Insurance Chapter 12 © 2011 Cengage Learning.