A REVIEW OF KEY REAL ESTATE PRINCIPLES FOR ALL REAL ESTATE PROFESSIONALS These principles listed below are key principles from our program and have no affiliation, relation and do not correspond to any exam, course, continuing education, or test. Any similarities are entirely coincidental. A FICTITIOUS DEED OF TRUST IS NOT SOMETHING FAKE. IN FACT THIS IS THE TYPE OF DEED THAT IS RECORDED IN CALIFORNIA COUNTIES SHOWING CLAUSES AND OTHER PROVISIONS OF A PROMISSORY NOTE OR TRUST DEED. CHAIN OF TITLE TRACES THE CHANGE OF OWNERSHIP AS FAR BACK AS OWNERSHIP RECORDS GO LEADING TO THE CURRENT OWNER OF THE PROPERTY. IT IS ACTUALLY TRUE THAT AN ESCROW COMPANY CAN BE OWNED BY A BROKERAGE OR A VARIETY OF OTHER ENTITIES. THESE ESCROW COMPANIES ARE CALLED CONTROLLED ESCROW COMPANIES. INSURING PROPER DOCUMENTATION, DELIVERY OF A DEED UPON COMPLIANCE OF ESCROW INSTRUCTIONS AND THE ISSUANCE OF TITLE INSURANCE UPON COMPLETION OF A SALE OR EXECUTION ARE ALL VERY GOOD REASONS TO HAVE AN ESCROW. IF THINGS LIKE RENTS OR PROPERTY TAXES NEED TO DIVIDED UP OR DISTRIBUTE PROPORTIONATELY BETWEEN A BUYING PARTY AND A SELLING PARTY, THIS DIVIDING UP OF OWNERSHIP OF THESE COSTS IS CALLED A PRORATION. RESPA STANDS FOR REAL ESTATE SETTLEMENT PROCEDURES ACT. IT WAS PASSED IN 1974. BULK SALE, GOOD WILL, COVENANTS NOT TO COMPETE, INVENTORY AND OTHER TERMS ARE ALL THINGS THAT ARE ASSOCIATED WITH THE SALE OF A BUSINESS OR BUSINESS OPPORTUNITY. IF AN ESCROW IS CANCELLED, BOTH THE BUYER AND THE SELLER MUST SUBMIT MUTUAL CANCELLATION INSTRUCTIONS TO THE ESCROW COMPANY ESPECIALLY INSTRUCTIONS FOR RETURN OF DEPOSITS.
ESCROW: A GRANT MAY BE DEPOSITED BY THE GRANTOR WITH A THIRD PERSON, TO BE DELIVERED ON PERFORMANCE OFA CONDITION, AND, ON DELIVERY BY THE DEPOSITOR IT WILL TAKE EFFECT. THIS IS WHILE IN THE POSSESSION OF THE THIRD PERSON, AND SUBJECT TO A CONDITION. AN ESCROW COMPANY IS NOT LICENSED WITH THE STATE OF CALIFORNIA UNLESS THEY HAVE FIRST SUBMITTED AN APPLICATION AND BEEN APPROVED FOR THAT LICENSE BY THE CALIFORNIA COMMISSIONER OF CORPORATIONS. A BROKER WITH AN INTEREST IN AN ESCROW COMPANY WOULD BE IN VIOLATION OF THE BUSINESS AND PROFESSIONS CODE IF THIS FACT WAS USED TO ESTABLISH HIGHER COMMISSION SPLITS AND OTHER INCENTIVE-BASED PRACTICES. A SUPPLEMENTAL TAX BILL IS THE DIFFERENCE BETWEEN THE ASSESSED VALUE OF THE HOUSE AND THE MARKET VALUE OF THE HOUSE. CERTIFIED MOBILE HOME SPECIALIST IS JUST ONE OF THE DESIGNATIONS OFFERED BY THE CALIFORNIA ESCROW ASSOCIATION THE DAILY AMOUNT OF INTEREST ON A 6% LOAN ON A 300,000 HOUSE IS $50 A DOCUMENT IS ESSENTIALLY CONSIDERED TO BE DELIVERED WHEN IT IS MADE A PUBLIC DOCUMENT BY RECORDING...THIS IS CALLED CONSTRUCTIVE DELIVERY. THE GOOD FUNDS LAW ESTABLISHES WHAT FUNDS ARE CONSIDERED GOOD AND WHICH ARE SUBJECT TO 3-5 DAY BUSINESS AND BANKING HOLDS. A PERSONAL CHECK (THAT IS NOT ISSUED BY A GOVERNMENT AGENCY, A POSTAL MONEY ORDER OR A VALID CASHIERS CHECK) WOULD NOT BE CONSIDERED GOOD FUNDS AND SUBJECT TO THE WAITING PERIOD. AN OPENING PACKAGE SENT FROM AN ESCROW COMPANY WOULD HAVE MANY ITEMS IN IT, INCLUDING: VESTING DESIGNATION FORM, NOTICE OF CALIFORNIA TAX WITHHOLDING AND PRELIMINARY CHANGE OF OWNERSHIP REPORT. WHEN A BUYER OR SELLER IS OBTAINING OR PAYING OFF AN EXISTING PURCHASE OR LOAN MID-MONTH IT WOULD MOSTLY LIKELY REQUIRE A PRORATION.
A SIGNED DATED FORMAL REPORT WHICH SETS OUT IN DETAIL THE CONDITION OF TITLE IS A PRELIMINARY TITLE REPORT. FOR MANUFACTURED HOMES, THAT ARE CONSIDERED TO BE PERSONAL PROPERTY, THE SALE AND TRANSFER OF TITLE MUST BE IN COMPLIANCE WITH THE REQUIREMENT OF THE DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT LOSSES FROM PUNITIVE DAMAGES ARE NOT CONSIDERED WITHIN WHAT A LICENSED ESCROW AGENT IS PROTECTED FROM AS BEING A MEMBER OF THE FIDELITY CORPORATION. A HUD SETTLEMENT STATEMENT IS MOST LIKELY GOING TO BE INVOLVED IN ANY FEDERALLY RELATED MORTGAGE LOAN. THE DEED THAT TRANSFERS ONLY THE PRESENT RIGHT OR INTEREST OF THE GRANTOR AND CONTAINS NO IMPLIED WARRANTIES IS CALLED A QUITCLAIM DEED. LENDER LOSSES DUE TO FORECLOSURE ARE USUALLY NOT COVERED BY TITLE INSURANCE. TIME FRAM FOR RELEASE OF CONTINGENCIES, WHO IS RESPONSIBLE FOR RELEASING CONTINGENCIES AND HOW WILL CONTINGENCIES BE REMOVED ARE ALL THINGS THAT ESCROW WOULD BE CONCERNED WITH. A DECLARATION OF AVOWAL OF ONEʼS ACT OR OF A FACT TO GIVE IT LEGAL VALIDITY IS KNOWN AS ACKNOWLEDGEMENT. INDIVIDUAL ESCROW OFFICERS ARE NOT LICENSED. CERTIFIED ESCROW OFFICER, CERTIFIED ESCROW TECHNICIAN AND CERTIFIED MOBILE HOME SPECIALIST ARE ALL PROGRAMS TO CERTIFY ESCROW OFFICERS BY THE CALIFORNIA ESCROW ASSOCIATION. A TYPE OF PROMISSORY NOTE WHERE THE PRINCIPLE IS DUE AT SPECIFIC TIMES, WITH INTEREST IS CALLED STRAIGHT NOTE.
THE TYPE OF DEED THAT CONTAINS IMPLIED WARRANTIES THAT THE GRANTOR HAS NOT PREVIOUSLY CONVEYED OR ENCUMBERED TO THE PROPERTY IS CALLED A GRANT DEED. GUARDIAN: A POSITION OF BEING LEFT IN THE CARE OR GUARD OF ANOTHER. ACTUAL DELIVERY: A DOCUMENT THAT IS CONSIDERED TO BE DELIVERED BECAUSE IT HAS BEEN MADE A PUBLIC DOCUMENT BY HAVING IT RECORDED. A STANDARD FORM THAT CAN CREATE A PURCHASE CONTRACT AND BECOMES THE INSTRUCTIONS TO THE ESCROW COMPANY IS CALLED THE RESIDENTIAL PURCHASE AGREEMENT AND JOINT ESCROW INSTRUCTIONS. TO EMPOWER SOMEONE TO ACT ON YOUR BEHALF FOR A SPECIFIC PURPOSE IS CALLED SPECIFIC POWER OF ATTORNEY. THE ESCROW HOLDERS TRUST FUND LIABILITY TO EACH BENEFICIARY IS TRACKED BY THE BENEFICIARY LEDGER. FUNDS OWNED BY THE ESCROW HOLDER MAY NOT BE HELD IN AN ACCOUNT THAT IS CHARACTERIZED AS A PERSONAL ACCOUNT. THE TOTAL OF ALL FUNDS BEING HELD IN A TRUST IS THE ESCROW HOLDERʼS TURST FUND LIABILITY. TITLE INSURERS ARE REGULATED BY THE CALIFORNIA DEPARTMENT OF INSURANCE. A NOTE IS ANOTHER NAME FOR A SIGNED WRITTEN PROMISE TO PAY BACK A LOAN. THE SUPPLEMENTAL PROPERTY TAX BILL WOULD BE FOR THE DIFFERENCE BETWEEN THE PAST ASSESSED VALUE AND THE ASSESSED VALUE AFTER THE SALE OF A PROPERTY OR HOME. CONDITIONS UNDER WHICH THE TITLE COMPANY WILL ISSUE A PARTICULAR TYPE OF TITLE INSURANCE CAN BE FOUND IN THE COVERAGE PAGE OF THE POLICY.
CALIFORNIA CODE OF REGULATIONS REQUIRES ESCROW AGENTS TO RETAIN COPIES OF BANKS STATEMENTS, CANCELLED CHECKS AND COPIES OF BANK DEPOSIT SLIPS FOR TRUST OR ESCROW ACCOUNTS FOR AT LEAST 5 YEARS. A PAYOFF DEMAND IS A STATEMENT ORDERED BY THE ESCROW HOLDER FROM THE LENDER OF RECORD WHICH SHOWS THE AMOUNT OF THE LOANS TO BE PAID OFF AT THE TIME OF THE CLOSING. FOR THE PURPOSES OF PRORATION, ESCROW GENERALLY USES A 30 DAY MONTH AND A 360 DAY YEAR. A NOTE IS A SIGNE WRITTEN PROMISE TO PAY BACK A LOAN. WHEN SIMULTANEOUSLY THE BUYERS FUNDS BECOME THE PROPERTY OF THE SELLER AND THE PURCHASERS DEED IS RECORDED, THE TRANSACTION IS COMPLETE. THE CALIFORNIA ESCROW ASSOCIATION IS A STATEWIDE ORGANIZATION FOR PROFESSIONAL ESCROW PRACTITIONERS. ONCE A BUYER HAS SIGNED THE LOAN DOCUMENTS, THE ESCROW COMPANY WILL PREPARE THE FUNDING PACKAGE TO BE RETURNED TO THE LENDER. WHEN AN ESCROW CLOSES MID MONTH THE BUYER WILL PAY INTEREST UP UNTIL THE END OF THAT MONTH. THIS IS CALLED PRE-PAID INTEREST. THE LEGAL DESCRIPTION OF THE PROPERTY IS SOMETHING THAT WOULD BE REVIEWED BY THE PRELIMINARY TITLE REPORT. TITLE INSURERS ARE REGULATED BY THE CALIFORNIA DEPARTMENT OF INSURANCE (DOI). THE ESCROW HOLDERS TRUST FUND LIABILITY TO EACH BENEFICIARY CAN BE TRACKED BY THE BENEFICIARY LEDGER.
FUNDS OWNED BY THE ESCROW HOLDER CANNOT BE PLACED INTO AN ACCOUNT DESIGNATED AS A PERSONAL ACCOUNT. A PRELIMINARY TITLE REPORT COVERS THE CONDITION UNDER WHICH THE TITLE COMPANY WILL ISSUE A CERTAIN TYPE OF TITLE INSURANCE. TO EMPOWER SOMEONE TO ACT ON YOUR BEHALF FOR A SPECIFIC PURPOSE IS CALLED SPECIFIC POWER OF ATORNEY AFTER THE BUYER OF A HOME OR PROPERTY HAS LEGALLY SIGNED THE LOAN DOCUMENTS, THE ESCOW COMPANY WILL PREPARE THE FUNDING PACKAGE TO BE SENT TO THE LENDER. ENCUMBRANCE: THIS IS A RIGHT, LIEN OR CLAIM ON REAL PROPERTY BY A PERSON OR ENTITY WHO IS NOT THE OWNER. A PRELIM ALSO KNOWN AS A PRELIMINARY TITLE REPORT USUALLY IS USED TO LIST ALL OF THE LIENS AND ENCUMBRANCES ON A PROPERTY OR HOME. PRE-PAID INTEREST IS THE PARTIAL PAYMENT OF INTEREST PAID UNTIL THE END OF A MONTH. THIS IS TYPICALLY NECESSARY WHEN THERE IS A CLOSING MID-MONTH. BY RECORDING A DOCUMENT A GRANT DEED IS MADE PART OF THE PUBLIC RECORD. OF ALL THE THINGS THAT ESCROW OFFICERS AND ESCROW ADDRESS DURING A CLOSING, A SUPPLEMENTAL PROPERTY TAX BIL WOUDL NOT BE ONE OF THEM. A CURRENT AND VALID IDENTIFICATION IS REQUIRED WHEN A BUYER GOES TO A SIGNING ON LOAN DOCUMENTS.