Alabama Real Estate Practice Exam

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What is done during an escrow closing?

  1. Transfer of title to the new owner

  2. Physical possession of the property is handed over

  3. Deposit of funds/documents with instructions for closing

  4. Buyer finalizes mortgage details

The correct answer is: Deposit of funds/documents with instructions for closing

During an escrow closing, both the buyer and seller deposit funds and documents with a neutral third party, usually a title company. The title company follows the instructions provided by both parties to ensure a smooth and fair closing process. This includes ensuring the transfer of title to the new owner (option A) and the physical possession of the property being handed over (option B). However, these actions are not solely done during an escrow closing, as they can also be done separately outside of escrow. Option D is incorrect because the buyer finalizes mortgage details before the escrow closing process. Overall, the escrow closing is a crucial step in the home buying process where both parties complete necessary actions to ensure a successful transfer of ownership.

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