California Practice Test → Escrow & Title

California Escrow & Title
Practice Questions & Answers (2026)

Escrow, title, and closing questions on the California exam test how real estate transactions are closed, how title is transferred, and what happens at settlement. California uses escrow companies to handle closings, and candidates must understand the closing process, settlement statement, and title insurance requirements under California 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 California practice.

Full Practice Exam →Take Interactive Quiz

Updated May 2026 · California Department of Real Estate (DRE) exam outline

California Exam Study Resources

Everything you need to pass — in one place.

Practice TestMock ExamFlashcardsStudy ScheduleCalifornia BlogFull AccessMath HelpKey TermsState Pass RatesDifficulty RankingsBrowse Topics

Practice by Topic

Agency →DRE & Licensing →Contracts →Fair Housing →Finance →Escrow & Title →+7 more topics

California Study Guides

How to Pass the California Real Estate Exam (2026)California Real Estate Exam: 25 Practice Questions (With Answers)California Real Estate Exam Pass Rate: What the Numbers Tell YouCalifornia Real Estate Exam Topics: Complete Breakdown (2026)California Real Estate Exam Math: Formulas and Practice ProblemsCalifornia Real Estate Agency Law: What You Must Know for the Exam
Practice Questions

California Escrow & Title — Practice Questions & Answers

89 questions on Escrow & Title from the California real estate question bank. First 10 are free — sign up to unlock all 89.

Q1. What does 'escrow' mean in a California real estate transaction?

A.A loan from a bank to a buyer, under standard California escrow and title practice
B.A neutral third party holding funds and documents until conditions are met
C.A type of property deed, as typically handled by an escrow officer
D.The commission paid to a real estate agent, consistent with standard title insurance practice

Explanation

Escrow is a neutral depository where funds, documents, and instructions are held by a third party until all conditions of the sale are met and closing can occur.

Q2. A 'cloud on title' refers to:

A.A title held by a corporation, per customary closing procedure in California
B.Any claim or encumbrance that may impair the owner's title
C.A title recorded electronically, under standard California escrow and title practice
D.A title with multiple owners, as typically handled by an escrow officer

Explanation

A cloud on title is any outstanding claim, lien, or encumbrance that could affect or challenge the owner's clear title to a property. It must be resolved before a clean sale.

Q3. What is the purpose of title insurance?

A.To insure the property against fire and theft
B.To protect against defects in title that existed before the purchase
C.To guarantee the property's market value
D.To insure the lender against the borrower's default

Explanation

Title insurance protects the buyer (owner's policy) and lender (lender's policy) against losses from title defects, liens, or encumbrances that existed before the purchase.

Q4. Who selects the escrow company in California?

A.Always the buyer, consistent with standard title insurance practice
B.Always the seller, per customary closing procedure in California
C.The DRE, under standard California escrow and title practice
D.It is negotiable between buyer and seller

Explanation

In California, the selection of the escrow company is negotiable between buyer and seller. It is typically specified in the purchase agreement.

Q5. What is a 'grant deed'?

A.A deed used only for government property transfers, as typically handled by an escrow officer
B.A deed that implies the grantor owns the property and has not conveyed it to another
C.A deed that guarantees clear title, consistent with standard title insurance practice
D.A deed used for gifts of property, per customary closing procedure in California

Explanation

A grant deed is the most common deed in California. It contains two implied warranties: the grantor owns the property and has not previously transferred it, and there are no undisclosed encumbrances.

Q6. What is a 'quitclaim deed'?

A.A deed that guarantees clear title, under standard California escrow and title practice
B.A deed that conveys whatever interest the grantor may have, with no warranties
C.A deed used only in foreclosures, as typically handled by an escrow officer
D.A deed that transfers title upon death, consistent with standard title insurance practice

Explanation

A quitclaim deed conveys only whatever interest the grantor has — with no warranties or guarantees of title. It is often used between family members, to clear title defects, or in divorce settlements.

Q7. What is a warranty deed?

A.A deed with no guarantees, per customary closing procedure in California
B.A deed where the grantor guarantees clear title and will defend against future claims
C.A deed used only for commercial property, under standard California escrow and title practice
D.A deed issued by the government, as typically handled by an escrow officer

Explanation

A warranty deed (general warranty deed) contains express covenants where the grantor warrants clear title and promises to defend the grantee against any future title claims.

Q8. What is 'proration' in a real estate closing?

A.The agent's commission split, consistent with standard title insurance practice
B.The division of ongoing expenses (like taxes or HOA dues) between buyer and seller based on the closing date
C.The lender's approval process, per customary closing procedure in California
D.The title company's fee structure, under standard California escrow and title practice

Explanation

Proration divides ongoing expenses proportionally between the buyer and seller based on the closing date. For example, property taxes paid in advance by the seller would be credited back for the buyer's portion of the year.

Q9. A 'mechanic's lien' can be filed by:

A.A car mechanic owed money for auto repairs, as typically handled by an escrow officer
B.A contractor or supplier who has not been paid for work done on a property
C.A lender whose mortgage is unpaid, consistent with standard title insurance practice
D.The government for unpaid property taxes, per customary closing procedure in California

Explanation

A mechanic's lien (materialman's lien) is filed by contractors, subcontractors, or suppliers who have not been paid for labor or materials provided for improvements to a property.

Q10. Which type of lien takes priority regardless of when it was recorded?

A.Mortgage liens
B.Mechanic's liens
C.Property tax liens
D.Judgment liens

Explanation

Property tax liens (and special assessment liens) take priority over all other liens regardless of when they were recorded. This is a statutory priority established by law.

Q11. In California, who typically acts as the escrow holder in a real estate transaction?

A.The real estate broker, under standard California escrow and title practice
B.An independent escrow company or title company
🔒

79 more Escrow & Title questions

Create a free account to unlock all 89 California Escrow & Title questions with full explanations.

Sign Up Free — Unlock All QuestionsLog In

Free account · No credit card · Instant access to 10 questions

Other California Exam Topics

AgencyDRE & LicensingContractsFair HousingFinanceProperty OwnershipProperty ValuationReal Estate MathEnvironmentalTrust FundsProperty ManagementLand Use & Zoning
← Back to California Full Practice Test

Ready to take the full exam? Start free.

25 free questions · No signup · Instant access to all California topics

Free California Practice Exam →Full Access — 1,500+ Questions