Please respond to meghan with 200 words
BRE-110, California Real Estate Law
Huber and Tyler
Chapters # 11 & 12
Chapter 11 is all about escrow and closing. Escrow is the process in which a third party handles the money and documents to close a real estate transaction. There is a variety of factors that go into escrow. Escrow procedures include opening escrow, confirming the validity of escrow, performing a title search, clearing the title, completing all required inspections and necessary repairs, settling any debts, obtaining, and verifying financing for the purchase price, acquiring title insurance, and closing escrow by transferring funds along with the deed (Huber & Tyler, 2019, p. 391). I will be discussing two concepts from Chapter 11: (1) requirements for a valid escrow and (2) the Real Estate Settlement Procedure Act (RESPA). Chapter 12 covers the topic of real estate financing. Promissory notes, security agreements, optional loan terms, foreclosure, and reverse mortgages are reviewed in this chapter, as well as real property sales contracts, lending disclosure laws, the safe act, and agriculture security interests. I will be discussing one of many lending disclosure laws called the Truth in Lending Act (TILA).
Key Concept #1 – Chapter 11
In Chapter 11, I learned that the requirements to determine a valid escrow include an enforceable contract, relinquishment of control, and a valid deed (Huber & Tyler, 2019, pp. 395-396). A valid purchase agreement is considered an enforceable contract. Once escrow instructions have been agreed upon and signed, the depositor must relinquish control of funds and/or documents during escrow unless escrow is terminated, or the other party mutually agrees to release funds/documents. The deed must be confirmed valid to be involved in an escrow.
Key Concept #2 – Chapter 11
In Chapter 11, I discovered that the Real Estate Settlement Procedures Act (RESPA) is a federal law that compels lenders to disclose all information about any loan closing cost (Huber & Tyler, 2019, pp. 403-404). Any federal loans that finance residential property up to four units fall under this act. Lenders must disclose information regarding any fees included in the closing costs. In addition, RESPA prevents any kickbacks, such as referral fees or any kind of unearned fees and penalizes such actions.
Key Concept #3 – Chapter 12
The Truth in Lending Act (TILA) is one of the various lending disclosure laws that protect consumers (Huber & Tyler, 2019, pp. 451-453). TILA is a federal law requiring lenders to disclose all stipulations and credit costs of a loan to the consumer, such as the annual interest rate (APR), points, installment costs, payment schedule, due-on-sale clauses, and any other additional fees applied to loan costs. The lender must clarify what type of loan they are offering and provide an informational brochure explaining the loan. Any loan backed by a trust deed, used for personal purposes, falls under the protection of the federal act unless it is used for business, commercial, or agriculture purposes. Lenders must follow the rules specified by Regulation Z and the Federal Reserve Board enforces these guidelines along with regulating the advertising of consumer loans. The lender must provide the consumer with a disclosure statement including all financing costs within three days of the application before finalizing and collecting any payments.
Escrow is a lengthy and complicated process that makes sure every detail is in order before finalizing a real estate transaction. I always wondered why escrow takes at least 30 days and now I know why. There is no stone unturned in the escrow process. I also learned the three factors that govern the validity of an escrow. Both the RESPA and TILA acts protect consumers from entering into loans without being aware of all the conditions first. These chapters expanded and solidified the information I knew about the escrow process and real estate financing.