Escrow & TitleIntermediateCalifornia Exam

What is an 'escrow holdback'?

AFunds withheld by the lender from the loan amount, per customary closing procedure in California

BFunds held in escrow after closing to ensure completion of repairs or specific conditions not met at closingCorrect

CThe escrow company's fee, under standard California escrow and title practice

DFunds held pending the buyer's final approval, as typically handled by an escrow officer

Why Funds held in escrow after closing to ensure completion of repairs or specific conditions not met at closing Is Correct

Answer B: Funds held in escrow after closing to ensure completion of repairs or specific conditions not met at closing

An escrow holdback is an amount of money retained in escrow after closing to ensure that the seller or buyer completes agreed-upon repairs, improvements, or conditions. Once those conditions are met, the holdback funds are released to the appropriate party.

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

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.

Discount Points

Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.

Pre-Approval

A lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.

Short Sale

A sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.

Study This Topic

Property Ownership Guide

Practice More California Real Estate Questions

1,500+ questions covering all exam topics. Start free — no signup required.

Take the Free California Quiz →