Chapter 17 Vocab FIN 3710

Closing

The final step in a real estate transaction where title is transferred

Escrow

A neutral third-party arrangement where documents and funds are held until all conditions of the sale are met. Can be set up by buyer

Escrow Account

An account held by a third party (often lender) to collect and disburse funds for property taxes and insurance on behalf of the borrower.

Impound Account

Another term for escrow account used by lenders — funds are "______" to ensure taxes and insurance are paid.

Dry Closing

A closing where all documents are signed but funds are NOT yet disbursed — typically used when funding is delayed or in certain states.

Promissory Note

A written promise to repay a debt. In real estate

Contingency

A condition that must be met before a contract becomes binding. Common ______: financing

RESPA

Real Estate Settlement Procedures Act. Federal law requiring lenders to disclose all closing costs and prohibiting kickbacks/unearned fees.

Proration

The division of ongoing expenses (taxes)

Ripening

The process of a transaction moving from listing to contract to closing — the deal "____" as conditions are satisfied.

Listing → Ripening → Closing

The 3-stage sequence of a real estate transaction: property listed

RESPA Prohibitions

prohibits: kickbacks between settlement service providers