California Real Estate Broker ExaminationTransfer of PropertyEasy
A buyer and seller have agreed on a purchase price for a property. To ensure a smooth transfer of title and funds, they decide to use a neutral third party to hold all documents and money until the conditions of the sale are met. This process is commonly known as:
- AAdverse Possession
- BChain of Title Review
- CQuiet Title Action
- DEscrow
Show answer & explanationAnswer & explanation
Correct answer: D. Escrow
Escrow is the process by which a neutral third party holds funds and documents until all terms of the purchase contract are satisfied, facilitating a secure and orderly transaction.
Why the other options are wrong
- A. Adverse Possession is a method of acquiring title through open, notorious, continuous, and hostile occupation, not a sales process.
- B. Chain of Title Review is an examination of past property ownership, not the transaction itself.
- C. Quiet Title Action is a legal proceeding to remove a cloud on title, not a transaction process.
Escrow
A neutral third party holds documents and funds in a real estate transaction until all specified conditions are fulfilled, ensuring a secure and orderly transfer.
- Neutral third party (escrow officer)
- Holds documents (deed, loan papers) and funds (down payment, loan proceeds)
- Conditions must be met before closing
- Protects both buyer and seller
Memory trick: Escrow: The 'E' for Everyone's security.