Basic Escrow Concepts
1. What is escrow? A neutral third-party service that holds funds, documents,
and instructions from all parties to a real estate transaction until all conditions
are met.
2. What is the role of an escrow agent? To act as a neutral intermediary who
follows written instructions from all parties, safeguards funds and documents,
and ensures proper closing of the transaction.
3. Who can act as an escrow agent in Washington? Licensed escrow agents,
attorneys, licensed title insurance companies, and licensed title insurance
agents.
4. What is an escrow holder? The person or entity designated to act as the
depository of documents and funds in an escrow transaction.
5. What is the primary duty of an escrow agent? To remain neutral and
follow the written instructions of the parties to the transaction.
6. What is an escrow account? A trust account maintained by the escrow agent
to hold client funds separate from the agent's operating funds.
7. What does "closing" mean in escrow? The point at which all conditions
have been met, documents are recorded, and the transaction is complete.
8. What is a settlement statement? A detailed accounting of all funds received
and disbursed in the escrow transaction, showing debits and credits for each
party.
9. What is earnest money? A deposit made by the buyer to demonstrate good
faith and commitment to purchase the property.
10. Where is earnest money deposited? Into the escrow agent's trust account
or as otherwise agreed by the parties.
11. What is a purchase and sale agreement? A written contract between
buyer and seller outlining the terms and conditions of the real estate transaction.
12. What are escrow instructions? Written directions from the parties telling
the escrow agent what actions to take and conditions to fulfill.
,13. What is proration? The division of expenses between buyer and seller
based on the portion of time each owns the property.
14. What items are commonly prorated? Property taxes, HOA dues, rent,
insurance premiums, and utilities.
15. What is the closing date? The date when the transaction is completed and
ownership transfers from seller to buyer.
16. What is a contingency? A condition that must be satisfied before the
transaction can close.
17. Give three examples of common contingencies. Financing contingency,
inspection contingency, and appraisal contingency.
18. What is a walkthrough? A final inspection by the buyer before closing to
verify the property's condition.
19. What is title insurance? Insurance that protects against losses from defects
in title or liens against the property.
20. What is a deed? A legal document that transfers ownership of real property
from one party to another.
21. What is recording? The process of filing documents with the county
recorder's office to provide public notice of ownership and encumbrances.
22. What is a lien? A legal claim against property as security for a debt or
obligation.
23. What is a mortgage? A loan secured by real property, giving the lender a
lien against the property.
24. What is a promissory note? A written promise to repay a specific sum of
money under agreed terms.
25. What is an endorsement? An addition to a title insurance policy that
provides additional coverage or modifies existing coverage.
26. What is a preliminary report? A report showing the current condition of
title before issuing a title insurance policy.
27. What is the difference between buyer's and seller's escrow instructions?
They outline each party's specific obligations, conditions, and authorizations for
the escrow agent.
28. What is good faith? Honesty and fairness in conducting the transaction
without intent to defraud or deceive.
, 29. What is dual agency? When one agent represents both buyer and seller in
the same transaction.
30. What is the escrow agent's fiduciary duty? To act in the best interest of
all parties impartially and maintain confidentiality.
Washington State Escrow Law and Licensing (Questions 31-60)
31. What RCW governs escrow agents in Washington? RCW 18.44 - Escrow
Agent Registration Act.
32. What agency regulates escrow agents in Washington? The Washington
State Department of Financial Institutions (DFI).
33. Who must be licensed as an escrow agent in Washington? Anyone who
acts as an escrow agent for compensation, except exempted parties.
34. Who is exempt from escrow agent licensing requirements? Attorneys,
banks, savings institutions, title insurance companies, and their licensed agents
when acting within their authority.
35. What are the educational requirements for escrow agent licensing?
Completion of approved education courses covering escrow principles and
Washington law.
36. What is the continuing education requirement for escrow agents?
Escrow agents must complete continuing education hours as required by the
DFI to maintain their license.
37. What is a branch office in escrow? A physical location separate from the
main office where escrow business is conducted.
38. Must branch offices be registered? Yes, all branch offices must be
registered with the DFI.
39. What is an escrow officer? A person employed by a licensed escrow agent
to conduct escrow transactions.
40. What are the minimum bonding requirements for escrow agents?
Escrow agents must maintain a surety bond as specified by the DFI based on
their transaction volume.
41. What is the purpose of the escrow agent bond? To protect clients against
losses due to the escrow agent's wrongful acts or failure to faithfully perform
duties.
1. What is escrow? A neutral third-party service that holds funds, documents,
and instructions from all parties to a real estate transaction until all conditions
are met.
2. What is the role of an escrow agent? To act as a neutral intermediary who
follows written instructions from all parties, safeguards funds and documents,
and ensures proper closing of the transaction.
3. Who can act as an escrow agent in Washington? Licensed escrow agents,
attorneys, licensed title insurance companies, and licensed title insurance
agents.
4. What is an escrow holder? The person or entity designated to act as the
depository of documents and funds in an escrow transaction.
5. What is the primary duty of an escrow agent? To remain neutral and
follow the written instructions of the parties to the transaction.
6. What is an escrow account? A trust account maintained by the escrow agent
to hold client funds separate from the agent's operating funds.
7. What does "closing" mean in escrow? The point at which all conditions
have been met, documents are recorded, and the transaction is complete.
8. What is a settlement statement? A detailed accounting of all funds received
and disbursed in the escrow transaction, showing debits and credits for each
party.
9. What is earnest money? A deposit made by the buyer to demonstrate good
faith and commitment to purchase the property.
10. Where is earnest money deposited? Into the escrow agent's trust account
or as otherwise agreed by the parties.
11. What is a purchase and sale agreement? A written contract between
buyer and seller outlining the terms and conditions of the real estate transaction.
12. What are escrow instructions? Written directions from the parties telling
the escrow agent what actions to take and conditions to fulfill.
,13. What is proration? The division of expenses between buyer and seller
based on the portion of time each owns the property.
14. What items are commonly prorated? Property taxes, HOA dues, rent,
insurance premiums, and utilities.
15. What is the closing date? The date when the transaction is completed and
ownership transfers from seller to buyer.
16. What is a contingency? A condition that must be satisfied before the
transaction can close.
17. Give three examples of common contingencies. Financing contingency,
inspection contingency, and appraisal contingency.
18. What is a walkthrough? A final inspection by the buyer before closing to
verify the property's condition.
19. What is title insurance? Insurance that protects against losses from defects
in title or liens against the property.
20. What is a deed? A legal document that transfers ownership of real property
from one party to another.
21. What is recording? The process of filing documents with the county
recorder's office to provide public notice of ownership and encumbrances.
22. What is a lien? A legal claim against property as security for a debt or
obligation.
23. What is a mortgage? A loan secured by real property, giving the lender a
lien against the property.
24. What is a promissory note? A written promise to repay a specific sum of
money under agreed terms.
25. What is an endorsement? An addition to a title insurance policy that
provides additional coverage or modifies existing coverage.
26. What is a preliminary report? A report showing the current condition of
title before issuing a title insurance policy.
27. What is the difference between buyer's and seller's escrow instructions?
They outline each party's specific obligations, conditions, and authorizations for
the escrow agent.
28. What is good faith? Honesty and fairness in conducting the transaction
without intent to defraud or deceive.
, 29. What is dual agency? When one agent represents both buyer and seller in
the same transaction.
30. What is the escrow agent's fiduciary duty? To act in the best interest of
all parties impartially and maintain confidentiality.
Washington State Escrow Law and Licensing (Questions 31-60)
31. What RCW governs escrow agents in Washington? RCW 18.44 - Escrow
Agent Registration Act.
32. What agency regulates escrow agents in Washington? The Washington
State Department of Financial Institutions (DFI).
33. Who must be licensed as an escrow agent in Washington? Anyone who
acts as an escrow agent for compensation, except exempted parties.
34. Who is exempt from escrow agent licensing requirements? Attorneys,
banks, savings institutions, title insurance companies, and their licensed agents
when acting within their authority.
35. What are the educational requirements for escrow agent licensing?
Completion of approved education courses covering escrow principles and
Washington law.
36. What is the continuing education requirement for escrow agents?
Escrow agents must complete continuing education hours as required by the
DFI to maintain their license.
37. What is a branch office in escrow? A physical location separate from the
main office where escrow business is conducted.
38. Must branch offices be registered? Yes, all branch offices must be
registered with the DFI.
39. What is an escrow officer? A person employed by a licensed escrow agent
to conduct escrow transactions.
40. What are the minimum bonding requirements for escrow agents?
Escrow agents must maintain a surety bond as specified by the DFI based on
their transaction volume.
41. What is the purpose of the escrow agent bond? To protect clients against
losses due to the escrow agent's wrongful acts or failure to faithfully perform
duties.
