Washington Escrow (38-WA-03)
1. What is the primary purpose of an escrow in a real estate
transaction?
o A) To provide financing for the buyer
o B) To act as a neutral third party holding funds and documents
o C) To represent the seller's interests
o D) To appraise the property
o ANSWER : B - Escrow acts as a neutral third party holding funds
and documents until all conditions are met.
2. In Washington State, who typically selects the escrow company?
o A) Always the seller
o B) Always the buyer
o C) The real estate agent
o D) By mutual agreement or local custom
o ANSWER : D - Selection is typically by mutual agreement or
follows local custom.
3. What does "good funds" mean in Washington escrow transactions?
o A) Money that smells fresh
o B) Funds that are immediately available and irrevocable
o C) Cash only
o D) Certified checks from any bank
o ANSWER : B - Good funds are immediately available and
irrevocable.
4. When does an escrow officer's fiduciary duty begin?
, o A) At closing
o B) When earnest money is deposited
o C) Upon opening escrow and accepting instructions
o D) When the deed is recorded
o ANSWER : C - Fiduciary duty begins when escrow is opened and
instructions are accepted.
5. What is earnest money?
o A) The down payment
o B) A deposit showing the buyer's good faith intent
o C) The seller's profit
o D) The commission payment
o ANSWER : B - Earnest money is a good faith deposit from the
buyer.
6. Who may NOT serve as an escrow agent in Washington?
o A) Licensed escrow officers
o B) Attorneys
o C) Real estate brokers
o D) The buyer's cousin
o ANSWER : D - Parties with personal interest cannot serve as
neutral escrow agents.
7. What is the purpose of a preliminary title report?
o A) To show who will buy the property next
o B) To reveal existing liens, encumbrances, and ownership status
o C) To determine property taxes
o D) To appraise the property
o ANSWER : B - It reveals existing liens, encumbrances, and
current ownership.
8. What does "impound account" refer to?
o A) A seized bank account
, o B) An account for holding taxes and insurance payments
o C) The escrow company's operating account
o D) The earnest money deposit
o ANSWER : B - An account for collecting and paying taxes and
insurance.
9. What is a "short sale" in real estate?
o A) A transaction that closes in less than 30 days
o B) Sale for less than the mortgage balance, requiring lender
approval
o C) A sale of a small property
o D) A quick negotiation process
o ANSWER : B - Selling for less than owed, requiring lender
approval.
10.What is the Washington State excise tax based on?
o A) Property size
o B) Sale price of the property
o C) Buyer's income
o D) Type of property
o ANSWER : B - Based on the sale price of the property.
11.Who typically pays the Washington State excise tax?
o A) Always the buyer
o B) The escrow company
o C) Typically the seller, unless otherwise negotiated
o D) Split equally between parties
o ANSWER : C - Typically the seller pays, unless negotiated
differently.
12.What is a "cloud on title"?
o A) Weather damage to the deed
o B) Any claim or encumbrance that affects title validity
, o C) A title insurance policy
o D) A property boundary dispute only
o ANSWER : B - Any claim or encumbrance affecting clear title.
13.What does RESPA stand for?
o A) Real Estate Settlement Procedures Act
o B) Residential Escrow Standards and Practices Act
o C) Real Estate Sales Protection Agency
o D) Residential Estate Settlement Process Administration
o ANSWER : A - Real Estate Settlement Procedures Act.
14.What is the purpose of the Closing Disclosure (CD)?
o A) To advertise the property
o B) To provide detailed final loan terms and closing costs
o C) To transfer title
o D) To order title insurance
o ANSWER : B - Provides detailed final loan terms and closing
costs.
15.How many days before closing must the Closing Disclosure be
provided to the borrower?
o A) 1 business day
o B) 2 business days
o C) 3 business days
o D) 5 business days
o ANSWER : C - Must be provided at least 3 business days before
closing.
16.What is a "dual escrow"?
o A) Two properties sold simultaneously
o B) Two escrow companies working together
o C) A simultaneous sale and purchase by the same party
1. What is the primary purpose of an escrow in a real estate
transaction?
o A) To provide financing for the buyer
o B) To act as a neutral third party holding funds and documents
o C) To represent the seller's interests
o D) To appraise the property
o ANSWER : B - Escrow acts as a neutral third party holding funds
and documents until all conditions are met.
2. In Washington State, who typically selects the escrow company?
o A) Always the seller
o B) Always the buyer
o C) The real estate agent
o D) By mutual agreement or local custom
o ANSWER : D - Selection is typically by mutual agreement or
follows local custom.
3. What does "good funds" mean in Washington escrow transactions?
o A) Money that smells fresh
o B) Funds that are immediately available and irrevocable
o C) Cash only
o D) Certified checks from any bank
o ANSWER : B - Good funds are immediately available and
irrevocable.
4. When does an escrow officer's fiduciary duty begin?
, o A) At closing
o B) When earnest money is deposited
o C) Upon opening escrow and accepting instructions
o D) When the deed is recorded
o ANSWER : C - Fiduciary duty begins when escrow is opened and
instructions are accepted.
5. What is earnest money?
o A) The down payment
o B) A deposit showing the buyer's good faith intent
o C) The seller's profit
o D) The commission payment
o ANSWER : B - Earnest money is a good faith deposit from the
buyer.
6. Who may NOT serve as an escrow agent in Washington?
o A) Licensed escrow officers
o B) Attorneys
o C) Real estate brokers
o D) The buyer's cousin
o ANSWER : D - Parties with personal interest cannot serve as
neutral escrow agents.
7. What is the purpose of a preliminary title report?
o A) To show who will buy the property next
o B) To reveal existing liens, encumbrances, and ownership status
o C) To determine property taxes
o D) To appraise the property
o ANSWER : B - It reveals existing liens, encumbrances, and
current ownership.
8. What does "impound account" refer to?
o A) A seized bank account
, o B) An account for holding taxes and insurance payments
o C) The escrow company's operating account
o D) The earnest money deposit
o ANSWER : B - An account for collecting and paying taxes and
insurance.
9. What is a "short sale" in real estate?
o A) A transaction that closes in less than 30 days
o B) Sale for less than the mortgage balance, requiring lender
approval
o C) A sale of a small property
o D) A quick negotiation process
o ANSWER : B - Selling for less than owed, requiring lender
approval.
10.What is the Washington State excise tax based on?
o A) Property size
o B) Sale price of the property
o C) Buyer's income
o D) Type of property
o ANSWER : B - Based on the sale price of the property.
11.Who typically pays the Washington State excise tax?
o A) Always the buyer
o B) The escrow company
o C) Typically the seller, unless otherwise negotiated
o D) Split equally between parties
o ANSWER : C - Typically the seller pays, unless negotiated
differently.
12.What is a "cloud on title"?
o A) Weather damage to the deed
o B) Any claim or encumbrance that affects title validity
, o C) A title insurance policy
o D) A property boundary dispute only
o ANSWER : B - Any claim or encumbrance affecting clear title.
13.What does RESPA stand for?
o A) Real Estate Settlement Procedures Act
o B) Residential Escrow Standards and Practices Act
o C) Real Estate Sales Protection Agency
o D) Residential Estate Settlement Process Administration
o ANSWER : A - Real Estate Settlement Procedures Act.
14.What is the purpose of the Closing Disclosure (CD)?
o A) To advertise the property
o B) To provide detailed final loan terms and closing costs
o C) To transfer title
o D) To order title insurance
o ANSWER : B - Provides detailed final loan terms and closing
costs.
15.How many days before closing must the Closing Disclosure be
provided to the borrower?
o A) 1 business day
o B) 2 business days
o C) 3 business days
o D) 5 business days
o ANSWER : C - Must be provided at least 3 business days before
closing.
16.What is a "dual escrow"?
o A) Two properties sold simultaneously
o B) Two escrow companies working together
o C) A simultaneous sale and purchase by the same party
