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Transaction Management and Closing Process Flashcards

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  1. What is a HUD-1 Settlement Statement (or its TRID replacement, the Closing Disclosure) designed to show?

    Answer: An itemized accounting of all funds received and disbursed in the transaction

    The Closing Disclosure provides a complete line-by-line breakdown of every cost, credit, and payment in the transaction for both buyer and seller.

  2. When a transaction falls out of escrow, what are the potential consequences for the earnest money deposit?

    Answer: Its disposition depends on who is at fault and the terms of the purchase contract

    Contract terms and applicable state law govern earnest money disputes; if the buyer defaults without a valid contingency, the seller may keep it, but valid contingencies protect the buyer's deposit.

  3. What is a 'cloud on title' and why is it important in a real estate transaction?

    Answer: Any claim, encumbrance, or defect that affects the marketability of the title

    A cloud on title—such as an unresolved lien or disputed ownership—must be cleared before the property can be transferred with a clean, marketable title.

  4. What is the difference between a general warranty deed and a quitclaim deed in the US?

    Answer: A general warranty deed provides full guarantees of title going back to the property's origin; a quitclaim deed transfers only whatever interest the grantor currently holds

    A general warranty deed is the strongest form of conveyance, warranting title against any claims; a quitclaim deed transfers interest with no warranties whatsoever.

  5. What is a 'contingency removal' in California-style contracts and what does it signify?

    Answer: The buyer actively releasing their right to exit the contract under a specific contingency

    When a buyer removes a contingency, they waive their right to exit the deal under that contingency's protection, increasing their exposure if they later want to cancel.

  6. What is the purpose of a property survey in a residential transaction?

    Answer: To confirm the exact boundaries, encroachments, and easements of the property

    A survey establishes precise legal boundaries and reveals encroachments or easements that could affect the buyer's use and ownership of the property.

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