Housing and Community Development (HCD) Practice Exam

In what case is escrow NOT required for the sale of a used manufactured home in a park?

1. If it is a cash sale and the purchaser agrees to waive escrow

2. When the dealer agrees to handle the paperwork directly

3. If an inspection is complete

4. When the home is in compliance with state regulations

The correct answer is: If it is a cash sale and the purchaser agrees to waive escrow

The assertion that escrow is not required for a cash sale in which the purchaser agrees to waive escrow is accurate. In transactions involving the sale of a used manufactured home, the use of escrow is typically a protective measure for both the buyer and the seller. However, if the transaction is entirely cash and the buyer expresses a clear intention to waive the escrow process, this can streamline the transaction. The agreement to waive escrow indicates that both parties have confidence in the transaction, thus making the escrow unnecessary in such scenarios. The context surrounding other potential scenarios highlights why they inherently involve escrow. For instance, when a dealer handles the paperwork directly, there may still be a need for escrow to ensure proper fund handling and compliance with legal requirements. Similarly, if an inspection has been completed or if the home is in compliance with state regulations, these factors do not eliminate the need for escrow; rather, they enhance the overall safety and transparency of the transaction. Escrow acts as a safeguard in situations where complexities or legalities are involved, which is why those scenarios do not meet the criteria for exemptions from escrow requirements.