Escrow & TitleIntermediateArizona Exam

In Arizona, escrow is BEST described as:

AA trust account held exclusively by the mortgage lender where the buyer's down payment is deposited until the lender has approved the final loan underwriting conditions

BA neutral depository where money, documents, and instructions are held until conditions of a transaction are metCorrect

CThe government's official system for recording deeds, mortgages, and other real property instruments to provide constructive notice of ownership and encumbrances

DThe title insurance policy held by the buyer that guarantees marketable title and protects against any covered defects arising after the effective date of the policy

Why A neutral depository where money, documents, and instructions are held until conditions of a transaction are met Is Correct

Answer B: A neutral depository where money, documents, and instructions are held until conditions of a transaction are met

Escrow is a neutral arrangement where a third party (escrow agent/company) holds funds, documents, and instructions from buyer and seller until all conditions of the transaction are satisfied, at which point the transaction closes.

Exam Tip: Escrow & Title

Escrow questions test the neutral third-party role and the sequence of closing events. Remember that the escrow agent acts as a dual agent for both buyer and seller and cannot advocate for either side.

Key Escrow & Title Terms in This Question

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

Encumbrance

Any claim, lien, charge, or liability attached to real property that affects its value or limits its use.

Title Insurance

Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.

Escrow

A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.

People Also Study

Key Terms to Know

Escrow

A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.

Title Insurance

Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

Abstract of Title

A condensed history of a property's title, summarizing all recorded documents and encumbrances affecting it from the earliest record to the present.

State-Specific Concepts

Trust Account Rules

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Property Ownership Guide

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