CRS Transaction Management and Closing Process

Question 1

What is the primary role of an escrow company in a US residential real estate transaction?

Accepted Answer

To act as a neutral third party holding funds and documents until all conditions are met

Answer

To represent the buyer's interests exclusively

Answer

To appraise the property for the lender

Answer

To conduct the title search and issue title insurance

Question 2

Under TRID regulations, how many business days before closing must a buyer receive the Closing Disclosure?

Accepted Answer

3 business days

Answer

1 business day

Answer

5 business days

Answer

7 business days

Question 3

What does 'prorating' mean in the context of a real estate closing?

Accepted Answer

Dividing ongoing expenses like property taxes or HOA fees proportionately between buyer and seller based on the closing date

Answer

The lender's adjustment to the interest rate

Answer

The title company's fee for issuing title insurance

Answer

A reduction in the purchase price for deferred maintenance

Question 4

Which contingency allows the buyer to exit the contract if the property appraises below the purchase price?

Accepted Answer

Appraisal contingency

Answer

Inspection contingency

Answer

Financing contingency

Answer

Title contingency

Question 5

What does 'time is of the essence' mean when included in a purchase contract?

Accepted Answer

All contractual deadlines are strictly binding and failure to meet them can constitute default

Answer

The seller must close within 24 hours of signing

Answer

The buyer's closing costs will increase after a certain date

Answer

The listing agent must respond to offers within one business day

Question 6

What is the purpose of title insurance in a residential purchase?

Accepted Answer

To protect against losses from defects or claims against the title discovered after closing

Answer

To insure the physical structure of the home against damage

Answer

To guarantee the property's market value

Answer

To provide mortgage payment coverage if the buyer becomes unemployed