Leasing License Practice Exam

What condition must be fulfilled for escrow to take effect?

1. Completion of marketing efforts

2. Agreement from all parties involved

3. Satisfaction of specific conditions

4. Approval from the broker

The correct answer is: Satisfaction of specific conditions

For escrow to take effect, the satisfaction of specific conditions is essential. This means that certain predetermined requirements must be met before the escrow process can proceed. These conditions typically include elements such as the completion of necessary documents, the fulfillment of contractual obligations, or the attainment of contingencies outlined in the purchase agreement. In real estate transactions, for example, these conditions may involve securing financing, completing necessary inspections, or obtaining clear title to the property. The escrow agent holds the funds and documents until all specified conditions are satisfied, ensuring that all parties meet their obligations before the transaction can be finalized. While the agreement from all parties involved is important for setting the stage for a transaction, it alone does not initiate escrow. Similarly, completion of marketing efforts or obtaining approval from the broker does not in itself establish the conditions for escrow to function. Only the fulfillment of specific conditions achieves this necessary step in the process.