Fisher Law Corporation’s Frequently Asked Questions

The following are select subjects which are representative of the type of law we practice. Peruse the articles: If you don't find a subject that interests you, call us or e-mail us with your request.

Notice: The information contained in these articles is designed to provide accurate information in regard to the subject matters covered and is made available with the understanding that the information provided does not constitute the rendering of legal or professional services. All information is of a general nature, is specific to California law only, and is not intended to to replace professional or legal advice. Each person’s situation is unique and the information contained herein cannot be applied to any individual’s situation. If legal advise is required, the services of a professional should be sought.


What is an all-inclusive deed of trust? »

What is CERCLA? »

How does a condominium differ from a house? »

What are Covenants that run with the land? »

What is a deed in lieu of foreclosure? »

What are easements? »

What are Encroachments? »

How does escrow work? »

What is fire and flood insurance? »

How do foreclosures work? »

What are the different forms of doing business? »

What do trade terms mean? »

What are liquidated damages in real property contracts? »

What is a Lis Pendens? »

How do loan modifications work? »

What is a Mechanic’s Lien? »

How does a Multiple Listing Service work? »

What is an off-shore trust? »

How do real property taxes work? »

What is Procuring Cause? »

What is a Quitclaim Deed? »

What is RESPA? »

Who bears the risk of loss during escrow? »

What are second deeds of trust? »

What is the Statute of Frauds? »

What is Statute of Limitations on Debts Secured By a Mortgage? »

Does a buyer’s broker have a duty to inspect? »

What is The Parol Evidence Rule? »

What is Adverse Possession? »

 


Q. What is RESPA?

A. The purposes of the Real Estate Settlement Procedures Act (“RESPA”) are to ensure that purchasers and sellers of residential real estate are provided with greater and more timely information on the nature and costs of the settlement process, and to protect the purchaser from unnecessarily high settlement charges. To effectuate these objectives the Act requires advance disclosure of settlement costs, the elimination of kickbacks or referral fees, and reduction of the amounts that buyer are required to place in escrow accounts for taxes and insurance. The Act also provides for a reform of land title record procedures, but it does not effect any changes in California in this regard.

The Act only applies to the sale of residential real estate financed by a “federally related mortgage loan.” For the purposes of the Act, “residential real estate” is residential property for occupancy of one to four families and includes individual units in a condominium or cooperative development.

A “federally related mortgage loan” is a loan secured by a first lien on residential real estate, other than temporary financing such as a construction loan, which is:

1. Made by a lender insured or regulated by any federal agency; or

2. Made, insured, guaranteed, supplemented or assisted by any federal office or agency or in connection with any housing or urban development administered by any federal office or agency; or

3. Intended to be sold by the originating lender to the Federal National Mortgage Association (FNMA), the Government National Mortgage Association (GNMA), or the Federal Home Loan Mortgage Corporation (FHLMC); and

4. Made by a person defined as a “creditor” in the Truth in Lending Act, other than a state instrumentality, that makes loans aggregating more than one million dollars a year.

The proceeds of the loan must be used to finance the purchase of the property which is security for the loan, the loan must be a first lien on the interest in the real estate being purchased by the borrower (including a life estate, remainder interest, ground lease or long term leasehold estate), and the property must be improved by a structure or mobilehome (or it is intended that such a structure or mobilehome will be placed on the land).

A “settlement service” is the usual escrow procedure for the sale of real estate, but also includes title searches, examinations, certificates and insurance polices, services rendered by an attorney or real estate agent, and the preparation of documents, credit reports, appraisals, and pest or fungus inspections.

The Act does not apply to:

1. A loan to finance the purchase of 25 or more acres;

2. A home improvement loan or a refinance loan;

3. A loan to finance the purchase of a vacant lot where no portion of the proceeds is used to construct a residential dwelling on, or to purchase a mobilehome to be placed on, the lot;

4. Any transfers subject to an existing loan, except on the conversion of a construction loan to a permanent loan where the proceeds of the loan were used to finance the purchase by a first user;

5. A loan to finance construction of a residential dwelling where the lot is already owned by the borrower;

6. A loan for purchase where the primary purpose of the borrower is for resale; and

7. An installment contract of sale where title is not transferred to the purchaser on execution, except for a loan to finance the acquisition of title pursuant to such a land sales contract

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