CHCP Post-Closing Procedures & Recording 4 — Questions and Answers
Question 1: In a race-notice recording state, a subsequent purchaser prevails over a prior unrecorded deed only if the subsequent buyer:
- Records first and had no actual notice of the prior deed (Correct answer)
- Simply records first regardless of notice
- Had actual knowledge of the prior deed
- Pays a higher purchase price
Correct answer: Records first and had no actual notice of the prior deed
In race-notice states, a subsequent bona fide purchaser must both record first AND lack notice of the prior unrecorded conveyance to prevail.
Question 2: What is the purpose of a 'post-closing letter' sent to the buyer after closing?
- To demand additional funds from the buyer
- To summarize recorded document information, policy numbers, and important dates (Correct answer)
- To notify the buyer of future rate adjustments
- To confirm the seller has vacated the property
Correct answer: To summarize recorded document information, policy numbers, and important dates
A post-closing letter typically includes recording information, title policy details, and reminders about tax and insurance obligations.
Question 3: When a lender's deed of trust is recorded at closing, priority over a previously unrecorded deed from the same grantor is established by:
- The loan amount being higher
- The date the loan was approved
- The act of recording first with the county (Correct answer)
- Verbal agreement at closing
Correct answer: The act of recording first with the county
Under recording statutes, a lender who records its deed of trust first generally obtains priority over prior unrecorded interests.
Question 4: Which entity is responsible for paying recording fees and transfer taxes when they are not otherwise allocated in the purchase contract?
- Always the buyer
- Always the seller
- Determined by local custom or the closing disclosure allocation (Correct answer)
- The title company absorbs these costs
Correct answer: Determined by local custom or the closing disclosure allocation
Recording fees and transfer taxes are allocated per the purchase contract or, in its absence, by local custom as reflected on the Closing Disclosure.
Question 5: A closing agent inadvertently fails to record the deed for 10 days after closing. Which risk is most significant during this period?
- The title insurance policy becomes void
- A judgment lien against the seller could attach and gain priority (Correct answer)
- The buyer's loan is automatically called
- The seller can rescind the sale
Correct answer: A judgment lien against the seller could attach and gain priority
During the unrecorded gap, a creditor could file a judgment against the seller that attaches to the property before the buyer's deed is recorded.
Question 6: What is the function of a 'scrivener's affidavit' in post-closing document correction?
- It transfers title to the buyer
- It corrects minor clerical errors in a recorded instrument without re-execution by all parties (Correct answer)
- It releases a mortgage lien
- It establishes a new chain of title
Correct answer: It corrects minor clerical errors in a recorded instrument without re-execution by all parties
A scrivener's affidavit is used to correct minor typographical or clerical errors in a recorded deed without requiring full re-execution by the grantor.
Question 7: Under RESPA Section 10, the maximum allowable escrow cushion a lender may hold is:
- Three months of escrow payments
- Two months of escrow payments (Correct answer)
- One month of escrow payments
- No cushion is permitted
Correct answer: Two months of escrow payments
RESPA Section 10 limits the escrow cushion to no more than two months' worth of the estimated annual disbursements.
CHCP Post-Closing Procedures & Recording 4
In a race-notice recording state, a subsequent purchaser prevails over a prior unrecorded deed only if the subsequent buyer: