Escrow Process and Closing Statements

In what way are the tasks that escrow performs limited?

Escrow may only perform tasks according to written instructions from buyers and sellers.

Escrow may only perform tasks as outlined by the courts.

Escrow may only perform tasks as permitted by the buyer's lender.

Escrow may only perform tasks as stipulated by the buyer's and seller's brokers.

Escrow may only perform tasks according to written instructions from buyers and sellers.

What is the title insurance commitment that's issued by the title company during the escrow period?

An insurance policy that protects the buyer and lender against property ownership or interest claims made by others

A promise to cover all claims made against a property title

A promise to provide title insurance if certain conditions are met

A statement that all liens against the property have been cleared

A promise to provide title insurance if certain conditions are met

During the escrow period, the title insurance company issues a title commitment, which is a promise to provide title insurance if certain conditions (such as payoff of all liens) are met. The commitment notes what the policy will and will not cover.

Which of these is the most likely scenario for a closing in Hawaii?

The buyers and the sellers sign all closing and mortgage loan documents electronically on the closing date.

The buyers and the sellers will meet at the closing table with their agents and the escrow officer to sign all closing and mortgage documents.

The buyers will sign closing and loan documents before the seller signs.

The sellers sign closing documents first, and the buyers later sign closing and mortgage documents.

The sellers sign closing documents first, and the buyers later sign closing and mortgage documents.

Stan is stubbornly dragging his feet in sending the escrow agent information about his loan so the escrow officer can get Stan's loan payoff data. Which of these Hawaii documents addresses how Stan should be working with escrow?

Escrow instructions

Listing agreement

Loan documents

Purchase contract

Escrow instructions

Shawna and Todd are ready to close on their new Hawaii home. Closing can take place when which of these occurs?

Closing funds have cleared and are available for immediate disbursement by Escrow

Shawna and Todd have requested their down payment wire transfer

The lender has cleared the loan for closing

The new deed and mortgage documents have been recorded

Closing funds have cleared and are available for immediate disbursement by Escrow

Jeanine sold her Kihei duplex to Carlton for $418,000, and closing is on May 16. Each unit rents for $530 per month. The tenants paid rent in full on May 1. At closing, how will prorated rent be shown on the closing statements?

$494.66 seller credit, buyer debit

$494.66 seller debit, buyer credit

$565.33 seller credit, buyer debit

$565.33 seller debit, buyer credit

$494.66 seller debit, buyer credit

When Betsy closed on her Hawaii condo purchase, she needed to reimburse the seller for a prepaid water bill of $57. How did this appear on Betsy's settlement statement?

Credit (left-hand column)

Credit (right-hand column)

Debit (left-hand column)

Debit (right-hand column)

Debit (left-hand column)

Katrina's lender, ABC Mortgages, pre-approved her mortgage loan. Paul accepted her offer. Who or what entity most likely manages the earnest money until closing?

ABC Mortgages

Escrow

Katrina's agent

Paul's agent

Escrow

Mallory's firm is permitted by Hawaii law to hold earnest money funds for real estate transactions. Which of these statements must be true?

Mallory is a licensed attorney.

Mallory is a licensed real estate broker.

Mallory works for a corporation.

Mallory works for a licensed partnership.

Mallory works for a corporation.

Only specially bonded and licensed corporations may hold Hawaii escrow funds.

A Hawaii escrow officer needs to calculate a proration for a period of 12 days in February. How will this calculation be performed?

Calculate the monthly cost, then divide by 28.

Calculate the monthly cost, then divide by the number of days in February.

Divide the annual cost by 360; multiply the result by 12.

Divide the annual cost by 365; multiply the result by 12.

Divide the annual cost by 360; multiply the result by 12.

Which of these statements accurately reflects how items would appear on the settlement statement based on Hawaii custom?

Buyer pays all recording fees, title insurance, and loan fees.

Buyer pays FIRPTA/HARPTA, lender's title insurance, and loan fees.

Seller pays FIRPTA/HARPTA, buyer's title insurance, and conveyance taxes.

Seller pays lender's title insurance, FIRPTA/HARPTA, and fees for recording the new deed.

Seller pays FIRPTA/HARPTA, buyer's title insurance, and conveyance taxes.

while custom often dictates who pays for what, all these items are negotiable between buyer and seller.

Jenna and Hank just executed a contract for the sale of Hank's property. What Hawaii person or entity is most likely to handle the closing?

A lender

An attorney

A title company

The Bureau of Conveyances

A title company

Hawaii closings are nearly always managed by an escrow or closing officer at a title insurance company.

Kristin is buying Alyssa's Waikiki condo. They've not negotiated anything out of the ordinary related to who pays what closing costs. How will the lender's title insurance appear on the closing statement?

Cost is paid outside closing, so won't appear on settlement statement

Credit to seller, debit to buyer

Debit to buyer, no entry seller

Debit to seller, credit to buyer

Debit to buyer, no entry seller

Which of these actions is prohibited by Hawaii's Escrow Act of 1967?

Annual audits

Deposits into client trust fund accounts

Incorporation

Rebates and referral fees

Rebates and referral fees

The state of Hawaii tightly regulates the handling of escrow funds. Which of these situations would violate state requirements?

Candace uses funds from the firm's trust account to offer rebates to brokers.

Marcus deposits Jeannie's escrow check into the firm's trust account.

Margo disburses funds from the trust account based on the agreement between the buyer and seller.

The title company to which Jeffrey submits his firm's earnest money deposits is a licensed, bonded corporation.

Candace uses funds from the firm's trust account to offer rebates to brokers.

Martina, a Hawaii escrow officer, often works with Paul, a broker. Paul is representing Kelly, a seller. Kelly's buyer submits an earnest money deposit, which Paul then submits to Martina. The parties get into a contract dispute. Which of these statements best describes how Martina must handle the earnest money?

A. She must release the funds based on instructions from Paul.

B. She must release the funds based on instructions from the buyer.

C. She must release the funds based on the contract and escrow instructions.

D. She must release the funds based on instructions from the seller.

C. She must release the funds based on the contract and escrow instructions.

On January 1, Jackson prepaid $600 for a year's worth of landscaping services. He closed on the sale on March 14 and transferred the landscaping contract to the buyer, Sean. Calculate the proration to closing day. What will the proration look like on the settlement statement?

A. Debit seller, credit buyer for $121.57

B. Credit seller, debit buyer for $121.57

C. Debit seller, credit buyer for $478.43

D. Credit seller, debit buyer for $478.43

D. Credit seller, debit buyer for $478.43

Sean must reimburse Jackson for the amount paid for March 14 - December 31 (287 days). First calculate the daily amount for the charge: $600 ÷ 360 = $1.667. Multiply the number of days Sean owes to Jackson by the daily rate: 287 × $1.667 = $478.429, or $478.43. We know that a debit is an amount a party owes, and a credit is an amount a party will receive. Sean owes Jackson $478.43, which will appear as a debit to Sean and a credit to Jackson