An escrow officer in California is closing a short sale transaction. The seller's lender has issued a written short sale approval letter specifying an approved net payoff amount and a closing deadline. Which of the following represents the escrow officer's PRIMARY closing obligation that is unique to a short sale compared to a conventional sale?
Correct Answer
C) Disbursing proceeds strictly in accordance with the lender's approval letter terms and confirming the lender will issue a full reconveyance of the deed of trust upon receipt of the approved payoff
The defining characteristic of a short sale closing is that the lienholder is accepting less than the full balance owed and must release the deed of trust lien upon receipt of the approved payoff. The escrow officer's primary unique obligation is to disburse proceeds exactly as specified in the lender's approval letter — including any restrictions on seller proceeds, required contributions, or prohibited credits — and to confirm that the lender will issue a full reconveyance of the deed of trust. Without the reconveyance, the buyer cannot receive clear title. This differs from a conventional payoff where the lender is simply paid in full and reconveyance is automatic.
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A first-time homebuyer in California asks her agent what 'opening escrow' means. The agent explains that opening escrow refers to:
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A California escrow has just been opened following execution of a purchase agreement. The escrow officer is preparing the initial escrow instructions and coordinating the early-stage workflow. Which of the following correctly describes the sequence of two activities that typically occur at the SAME early stage of escrow, before contingency deadlines begin to run?