CHCP Title Insurance & Escrow Procedures 3

Question 1

What does 'chain of title' refer to in real estate transactions?

Accepted Answer

The sequence of recorded ownership transfers for a property

Answer

Chain of title is the chronological sequence of historical transfers of title to a parcel of land from the original grant to the present owner.

Question 2

An escrow holdback is most commonly used when:

Accepted Answer

Work agreed to by the seller is not completed by closing

Answer

An escrow holdback retains a portion of seller proceeds to ensure incomplete repairs or improvements are finished after closing.

Question 3

Which of the following is NOT typically a Schedule B-I exception in a title commitment?

Accepted Answer

The purchase price agreed between buyer and seller

Answer

The purchase price is a contractual matter, not a title exception; Schedule B-I lists standard exceptions to coverage such as taxes, easements, and possessory rights.

Question 4

A title search reveals a 15-year-old federal tax lien against a prior owner who conveyed the property 12 years ago. What is the typical resolution?

Accepted Answer

Require a release or discharge from the IRS before insuring

Answer

Federal tax liens follow the property and must be formally released or discharged by the IRS before a title company will insure clear title.

Question 5

In escrow, the term 'proration' at closing most commonly applies to:

Accepted Answer

Dividing ongoing expenses like property taxes and HOA dues based on closing date

Answer

Prorations at closing adjust property taxes, HOA fees, and similar recurring expenses so each party pays only for their period of ownership.

(CHCP) Certified Home Closing Professional Practice Test

(CHCP) Certified Home Closing Professional Practice Test

CHCP Title Insurance & Escrow Procedures 3