Arkansas Escrow & Title
Practice Questions & Answers (2026)
Escrow, title, and closing questions on the Arkansas exam test how real estate transactions are closed, how title is transferred, and what happens at settlement. Arkansas uses title companies or settlement agents to handle closings, and candidates must understand the closing process, settlement statement, and title insurance requirements under Arkansas law. Title insurance, title searches, and the difference between standard and extended coverage policies are tested, as are the specific closing costs that are customarily paid by buyers vs. sellers under Arkansas practice.
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Arkansas Escrow & Title — Practice Questions & Answers
141 questions on Escrow & Title from the Arkansas real estate question bank. First 10 are free — sign up to unlock all 141.
Q1. Title insurance protects against:
Explanation
Title insurance protects the policyholder against losses arising from defects in title that existed before (and were undiscovered at) the time the policy was issued — such as prior liens, forged documents, or undisclosed heirs.
Q2. A lender's title insurance policy protects:
Explanation
A lender's (mortgagee's) title insurance policy protects the lender up to the outstanding loan amount if a title defect emerges. It does not protect the buyer's equity; a separate owner's policy is needed for that.
Q3. Which of the following BEST describes a 'cloud on title'?
Explanation
A cloud on title is any claim, lien, encumbrance, or defect that affects the validity or marketability of title to real property. Examples include unresolved mechanic's liens, recorded judgments, or errors in a prior deed.
Q4. In an escrow closing, the escrow agent's primary duty is to:
Explanation
An escrow agent is a neutral third party who holds funds and documents and follows the written escrow instructions of all parties. They act impartially and do not represent either the buyer or seller.
Q5. Which document transfers legal title from the seller to the buyer in a real estate transaction?
Explanation
A deed is the legal instrument that transfers title (ownership) from the grantor (seller) to the grantee (buyer). The deed must be delivered to and accepted by the grantee to be effective.
Q6. To be recorded in Arkansas, a deed must be:
Explanation
For a deed to be eligible for recording in Arkansas, it must be signed by the grantor and acknowledged (notarized) before a notary public. Recording provides constructive notice to the public.
Q7. The primary purpose of title insurance is to:
Explanation
Title insurance protects the insured (owner or lender) against financial loss from title defects, liens, or encumbrances that were unknown or undiscovered before closing. It covers past events, unlike other insurance that covers future risks.
Q8. A lender's title insurance policy (loan policy) protects:
Explanation
A lender's policy protects the mortgage lender's security interest. It is typically required by lenders and decreases in coverage as the loan balance is paid down. The buyer needs a separate owner's policy for personal protection.
Q9. A general warranty deed provides the grantee with the strongest protection because it contains the grantor's covenant to:
Explanation
A general warranty deed contains the broadest covenants. The grantor warrants and defends the title against all defects and encumbrances, whether they arose before or during the grantor's ownership.
Q10. A special warranty deed differs from a general warranty deed in that it warrants title only against claims arising:
Explanation
A special warranty deed limits the grantor's warranty to claims arising from events during their ownership period. The grantor makes no warranty against defects that existed before they took title.
Q11. A quitclaim deed transfers:
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