CHCP Real Estate Transactions & Documentation

Question 1

What is a purchase agreement?

Accepted Answer

Contract between buyer and seller

Answer

A purchase agreement is a legally binding contract between a buyer and a seller that outlines the terms and conditions for the sale of a property. It details essential elements such as the purchase price, property description, contingencies, closing date, and other specific conditions agreed upon by both parties. This document is fundamental to the home closing process, formalizing the transaction.

Question 2

What is title insurance?

Accepted Answer

Insurance against title defects

Answer

Title insurance is a type of insurance that protects both the homebuyer and the lender against financial loss from defects in a property's title. These defects can include undisclosed liens, errors in public records, forged documents, or claims by unknown heirs. It provides peace of mind by ensuring that the buyer has clear ownership of the property and is protected from future claims against the title.

Question 3

What document transfers ownership of property?

Accepted Answer

Deed

Answer

A deed is the legal document that officially transfers ownership of real property from one party (the grantor) to another (the grantee). It contains a description of the property and is recorded in public records to provide notice of the new ownership. Without a properly executed and delivered deed, legal title to the property does not pass.

Question 4

What is escrow in real estate transactions?

Accepted Answer

Neutral third party holding funds

Answer

In real estate, escrow refers to a neutral third party that holds funds and documents related to a transaction until all conditions of the sale are met. This ensures that both the buyer and seller fulfill their obligations before the property and money change hands. The escrow agent acts as a safeguard, providing security and impartiality to the closing process.

Question 5

What is a closing disclosure?

Accepted Answer

Final loan and cost summary

Answer

The Closing Disclosure (CD) is a five-page form that provides final details about the mortgage loan you have selected. It outlines all the costs associated with the transaction, including the loan terms, projected monthly payments, and the fees and costs the buyer and seller will pay at closing. This document allows consumers to compare the final terms and costs with the Loan Estimate they received earlier.

(CHCP) Certified Home Closing Professional Practice Test

(CHCP) Certified Home Closing Professional Practice Test

CHCP Real Estate Transactions & Documentation