CRS Transaction Management and Closing Process 1

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

Escrow serves as a neutral custodian, ensuring that funds and documents are transferred only when all contractual conditions have been satisfied.

Question 2

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

Accepted Answer

3 business days

Answer

TRID requires lenders to deliver the Closing Disclosure at least three business days before consummation, giving buyers time to review final costs.

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

Proration ensures each party pays only for the portion of recurring costs (taxes, HOA, etc.) that falls within their period of ownership.

Question 4

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

Accepted Answer

Appraisal contingency

Answer

An appraisal contingency protects the buyer if the lender's appraised value is less than the agreed purchase price, preventing the buyer from overpaying.

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

This clause makes all specified dates and deadlines in the contract legally enforceable; missing them can be treated as a breach of contract.

CRS - Certified Residential Specialist Practice Test

CRS - Certified Residential Specialist Practice Test

CRS Transaction Management and Closing Process 1