In Colorado, a 'construction escrow' is used when:
Why B. Funds are held by an escrow agent and disbursed in stages as construction milestones are met, protecting both the lender and the owner from contractor non-performance Is Correct
Answer B: B. Funds are held by an escrow agent and disbursed in stages as construction milestones are met, protecting both the lender and the owner from contractor non-performance
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
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Key Terms to Know
A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Chain of TitleThe sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.
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