38-WA-03 WASHINGTON ESCROW VERIFIED QUESTIONS AND ANSWERS FOR EASY EXAM PASS

WASHINGTON ESCROW LICENSE (38-WA-03)


1. What is the primary purpose of an escrow?
A. To finance real estate transactions
B. To act as a neutral third party holding funds and documents
C. To provide title insurance
D. To negotiate contract terms
Correct ANSWER : B
Explanation: An escrow acts as a neutral third party, holding money and
documents until all conditions of a transaction are met.


2. In Washington State, escrow companies are regulated by which agency?
A. Washington Department of Revenue
B. Washington Department of Licensing
C. Washington Department of Financial Institutions (DFI)
D. Secretary of State
Correct ANSWER : C
Explanation: The Washington Department of Financial Institutions (DFI)
regulates escrow agents and companies.


3. An escrow agent owes a fiduciary duty primarily to whom?
A. The buyer only
B. The seller only
C. The lender
D. All parties to the escrow

,Correct ANSWER : D
Explanation: Escrow agents must remain neutral and owe fiduciary duties to
all parties involved.


4. Which document typically opens an escrow?
A. Deed of Trust
B. Purchase and Sale Agreement
C. Promissory Note
D. Closing Disclosure
Correct ANSWER : B
Explanation: The Purchase and Sale Agreement sets the terms and triggers
the opening of escrow.


5. What is “earned escrow fee”?
A. Fee charged before escrow opens
B. Fee earned when escrow instructions are accepted
C. Fee earned when escrow closes
D. Fee paid to the lender
Correct ANSWER : C
Explanation: Escrow fees are earned upon successful closing of the
transaction.


6. Who prepares escrow instructions?
A. Escrow agent alone
B. Buyer only
C. Seller only
D. Buyer and seller (or their agents)
Correct ANSWER : D
Explanation: Escrow instructions reflect mutual agreement between buyer
and seller.


7. What happens if escrow instructions conflict with the purchase
agreement?

,A. Escrow agent chooses which to follow
B. Purchase agreement prevails automatically
C. Parties must clarify or amend instructions
D. Escrow closes anyway
Correct ANSWER : C
Explanation: Conflicts must be resolved before closing to avoid liability.


8. Which fund must escrow trust accounts be kept separate from?
A. Buyer’s funds
B. Seller’s funds
C. Company operating funds
D. Lender funds
Correct ANSWER : C
Explanation: Trust funds must be segregated from operating accounts to
protect clients.


9. Commingling refers to:
A. Mixing buyer and seller funds
B. Combining trust funds with operating funds
C. Holding funds too long
D. Charging excessive fees
Correct ANSWER : B
Explanation: Commingling is prohibited and is a serious regulatory violation.


10. How soon must trust funds be deposited in Washington escrow
accounts?
A. Within 24 hours
B. Within 48 hours
C. By end of business day or next banking day
D. Within 5 business days
Correct ANSWER : C
Explanation: Washington law requires prompt deposit of escrow funds.

, 11. Who is responsible for disbursing escrow funds?
A. Buyer
B. Seller
C. Escrow agent
D. Lender
Correct ANSWER : C
Explanation: The escrow agent disburses funds according to written
instructions.


12. What document transfers ownership from seller to buyer?
A. Deed of Trust
B. Warranty Deed
C. Promissory Note
D. Settlement Statement
Correct ANSWER : B
Explanation: A Warranty Deed conveys ownership and guarantees clear title.


13. Which deed provides the greatest protection to the buyer?
A. Quitclaim Deed
B. Grant Deed
C. Warranty Deed
D. Trustee’s Deed
Correct ANSWER : C
Explanation: A Warranty Deed offers full covenants and protection.


14. A quitclaim deed transfers:
A. Guaranteed ownership
B. Full title insurance
C. Whatever interest the grantor has
D. Lender rights
Correct ANSWER : C
Explanation: Quitclaim deeds offer no guarantees.