CHCP Title Insurance & Escrow Procedures 5

Question 1

A title search uncovers an old mortgage that was paid off but never formally released in the public records. What should the closing agent require?

Accepted Answer

A recorded satisfaction, release, or discharge of mortgage from the lender

Answer

An unreleased mortgage remains a cloud on title; a recorded satisfaction or discharge is needed to formally extinguish the lien in the public record.

Question 2

What is 'constructive notice' in the context of title insurance?

Accepted Answer

Legal notice imputed to all parties because an instrument is properly recorded in public records

Answer

Constructive notice means the law presumes everyone knows about interests properly recorded in the public land records, even if they haven't personally reviewed them.

Question 3

Which of the following would cause a title company to issue a 'clean' (or 'straight') title commitment without exception?

Accepted Answer

All Schedule B-I requirements have been met and all clouds on title resolved

Answer

A clean commitment is issued only when all requirements in Schedule B-I are satisfied and no unresolvable exceptions remain in Schedule B-II.

Question 4

During escrow, the buyer attempts to direct the escrow agent to release earnest money to them before closing conditions are met. The escrow agent should:

Accepted Answer

Refuse and require written mutual consent from all parties or a court order

Answer

Escrow agents are neutral stakeholders who may only disburse funds per the escrow instructions, mutual written consent of all parties, or court order.

Question 5

What is the significance of the 'effective date' on a title insurance policy?

Accepted Answer

The date through which the title search was conducted and from which coverage begins

Answer

The policy effective date marks the end of the title search period; the insurer accepts liability for defects existing as of that date that were not disclosed in Schedule B.

(CHCP) Certified Home Closing Professional Practice Test

(CHCP) Certified Home Closing Professional Practice Test

CHCP Title Insurance & Escrow Procedures 5