Test Bank Answer Key
Chapter 14 Real Estate Closings
TRUE/FALSE
1. The main document to review in order to prepare a sale closing checklist is the real estate
contract.
2. The main document to review in order to prepare a sale closing checklist is the loan
commitment.
3. At minimum, a purchaser under a sales contract is required to provide money for the purchase
price and proof of insurance at closing.
4. Most contracts contain a legal description of the property.
5. A foreign person affidavit is signed by the purchaser.
6. A foreign person affidavit is signed by the seller.
7. A foreign person affidavit is for the benefit of the seller.
8. A foreign person affidavit is for the benefit of the purchaser.
9. A corporate seller should provide the purchaser with a corporate resolution.
10. A title examination is generally the last thing to be ordered for a closing.
11. A surveyor should indicate if the property is located in a flood hazard zone.
12. A determination as to whether property is located in a flood hazard zone is made by the
title examiner.
13. A loan commitment will always state the amount of the loan.
14. Most mortgage loans are repaid monthly.
15. Most mortgage loans are repaid semiannually.
16. Most payments on mortgage loans are made in arrears.
17. If a loan payment due October 1 pays for interest due for the month of September, the loan
payment is deemed to be paid in advance.
18. If a loan payment due October 1 pays for interest due for the month of September, the interest is
payable in arrears.
19. A loan can always be prepaid before its maturity.
20. Prepayment penalties are never enforceable.
21. Prepayment penalties are enforceable.
22. Most loan commitments require an appraisal of the value of the property be delivered to the
lender for review and approval prior to closing.
23. Most lenders require that a copy of the hazard insurance be provided to them at closing.
24. A penalty for late payment of a mortgage payment is known as a prepayment penalty.
25. A penalty for late payment of a mortgage payment is known as a commitment fee.
26. A penalty for late payment of a mortgage payment is known as a late charge.
27. Most loan commitments require the borrower to pay the lender’s expenses in closing the loan.
28. Most loan commitments do not require the borrower to pay the lender’s expenses in closing
the loan.
29. Most loan commitments are assignable by the borrower.
30. Most loan commitments are not assignable by the borrower.
31. A loan commitment is not effective or binding until it has been accepted by the borrower.
32. A loan commitment is effective without acceptance by the borrower.
33. Builder’s risk insurance insures that a construction project will be completed.
34. Most lenders in a construction loan want the right to review and approve final plans
and specifications.
35. Real estate taxes are often prorated between a purchaser and seller.
36. Real estate taxes are often prorated between purchaser and lender.
37. Insurance premiums but not real estate taxes are often prorated between a purchaser and seller.
38. A hazard waste indemnity, found in many real estate contracts, is for the benefit of the seller.
39. A hazard waste indemnity, found in many real estate contracts, is for the benefit of the
purchaser.
40. A loan that limits a borrower’s liability for repayment is called an exculpated loan.