CHCP Title Insurance & Escrow Procedures 4

Question 1

What is the purpose of a 'marked-up' title commitment at closing?

Accepted Answer

To confirm which exceptions have been satisfied and will be removed from the final policy

Answer

A marked-up commitment is the working document showing which Schedule B requirements were met and which exceptions were cleared before the final policy is issued.

Question 2

An owner's title policy insures against losses arising from which of the following after closing?

Accepted Answer

A forged deed in the chain of title discovered post-closing

Answer

Owner's title insurance covers defects existing as of the policy date, including forgery in the chain of title, even if discovered years later.

Question 3

A settlement agent receives a cashier's check for $485,000 from a buyer. Under most state escrow laws and best practices, where must these funds be held?

Accepted Answer

In a federally insured trust or escrow account separate from operating funds

Answer

Escrow funds must be held in a separate, trust account to protect client funds from commingling with operating funds and to ensure availability for disbursement.

Question 4

What distinguishes a lender's (mortgagee's) title policy from an owner's policy?

Accepted Answer

The lender's policy amount decreases as the loan is paid down; the owner's policy amount stays the same

Answer

A lender's policy coverage amount decreases with the outstanding loan balance, while an owner's policy protects the full purchase price value of the property.

Question 5

When a property has a homeowners association (HOA), what escrow-related step is critical before closing?

Accepted Answer

Obtaining an HOA estoppel letter confirming current dues and any assessments owed

Answer

An HOA estoppel letter provides a certified, binding statement of all amounts owed to the HOA, preventing the buyer from inheriting unpaid dues or special assessments.

(CHCP) Certified Home Closing Professional Practice Test

(CHCP) Certified Home Closing Professional Practice Test

CHCP Title Insurance & Escrow Procedures 4