Under California law, where must an escrow company hold client funds deposited during a residential transaction?
Correct Answer
B) In a separate escrow trust account at a bank or savings institution
Under California Financial Code §17414, escrow companies must deposit all client funds into escrow trust accounts held at a bank or savings institution. These accounts must be entirely separate from the company's operating funds and maintained solely for client transactions until proper disbursement per escrow instructions.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The closing process, also called settlement, is the final step in a real estate transaction where documents are signed, funds are disbursed, and title is officially transferred from the seller to the buyer.
Constructive notice is the legal presumption that a person has knowledge of information that is available through public records or visible inspection of the property, regardless of whether they actually knew about it.
A deed is a written legal document that conveys (transfers) ownership of real property from one party to another. It must be delivered to and accepted by the grantee to be effective.
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- → A buyer records a deed at the county recorder's office. What is the primary purpose of recording?
- → A buyer drives past the property and sees someone other than the seller living there and maintaining the yard. This observation should put the buyer on what type of notice?
- → In a covered purchase transaction, the borrower receives a final form showing the loan terms, cash to close, and settlement charges shortly before consummation. What form is this?
- → Along with the signed offer, Quinn Brooks delivers a check to demonstrate serious intent to complete the transaction if the offer is accepted. What is this deposit called?
- → On a settlement statement, the buyer's earnest money reduces the remaining cash needed to close. How is that item characterized?
- → On a settlement statement, an item increases the buyer's amount due at closing. How is that item characterized?
- → On the seller's settlement statement, the purchase price of $400,000 appears as what?
- → At closing, the purchase price of $350,000 appears on the buyer's side of the settlement statement. Is this amount a debit or a credit to the buyer?
- → Under TRID rules, the lender must deliver the Closing Disclosure to the borrower at least how many business days before loan consummation?
- → In an escrow closing, the escrow agent discovers that the seller has not yet provided the signed deed. What should the escrow agent do?
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Previous Question
A foreign investor (non-U.S. person) sells a California rental property for $800,000. The property carries a mortgage balance of $600,000. The escrow officer calculates that the combined federal FIRPTA withholding (15%) and California state withholding (3.33%) total approximately $146,400, which exceeds the seller's net equity of $200,000 after paying off the mortgage. What is the most appropriate course of action?
Next Question
During a California residential escrow, the seller submits an amended escrow instruction requesting a new closing date. The buyer has not signed or agreed to the amendment. What is the escrow officer's proper course of action?