Podcast
Questions and Answers
A closing agent is explicitly defined by law.
A closing agent is explicitly defined by law.
False
Closing services are distinct from title services.
Closing services are distinct from title services.
True
A closing agent has a duty to ensure that all contractual requirements are met at closing.
A closing agent has a duty to ensure that all contractual requirements are met at closing.
True
Fraud prevention is an irrelevant duty for closing agents.
Fraud prevention is an irrelevant duty for closing agents.
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Covered Risk 1 insures against loss or damage sustained by the insured due to title being vested as stated in Schedule A.
Covered Risk 1 insures against loss or damage sustained by the insured due to title being vested as stated in Schedule A.
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Fraud and forgery claims accounted for 20% of the total dollar amount spent on claims from 2013 to 2022.
Fraud and forgery claims accounted for 20% of the total dollar amount spent on claims from 2013 to 2022.
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The average cost of a fraud or forgery claim is significantly lower than that of a regular claim.
The average cost of a fraud or forgery claim is significantly lower than that of a regular claim.
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Covered Risk 2A specifically excludes fraud and forgery from its coverage.
Covered Risk 2A specifically excludes fraud and forgery from its coverage.
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Risks associated with vacant or unimproved properties should be scrutinized to prevent fraud.
Risks associated with vacant or unimproved properties should be scrutinized to prevent fraud.
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Study Notes
Closing Agent Duties
- Closing agents are not defined by statute, but their duties involve closing services
- These services include preparing documents, conducting closings, handling funds, paying fees, and supervising document execution
- Agents must act with reasonable prudence, meeting the standard of care
- Failure to meet this standard can lead to legal challenges, like a case involving termite inspections
- Agents must prevent fraud, as it's covered under title insurance policies
Fraud Prevention
- Covered risk 1 protects against vested title issues, including those due to fraudulent deeds
- Covered risk 2A covers loss from defects in title, such as fraud, forgery, undue influence, or incapacity.
- Fraud is a significant concern with increasing claims;
- Average fraud claim costs $143,000
- Independent reviews show 20% of claims are fraud-related (2013-2022)
- Average regular claims are $26,000
Verification and Red Flags
- Avoid relying on provided contact information, instead verify independently
- Review all documents meticulously for inconsistencies or red flags such as: absentee owners, vacant properties, or unimproved mortgages.
- Be aware of suspicious emails, voicemails, or other communications, and contact the parties involved independently.
- Check for correct and valid descriptions of property boundaries
- Proper grantor and grantee names are critical
- Watch out for recent changes of authority in entities within 6 months of the closing date-
- Review notary certificates and examine for irregularities.
Duties to the Insured
- Review deeds and mortgages thoroughly verifying grantor and grantee and the proper authority of the signatory.
- Homestead rights are critical for residential properties, requiring the spouse to sign documents for valid conveyance or mortgage.
- Accurate legal descriptions are vital for the validity of conveyances and mortgages.
- Verify authority of signatories for entities by review of the appropriate documents
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Description
Explore the essential duties of closing agents in real estate transactions, including document preparation and fraud prevention. Learn about the importance of meeting the standard of care and the implications of failing to do so. This quiz also addresses the risks of fraud in title insurance claims and how to identify red flags.
