Housing and Community Development (HCD) Practice Exam

What is required immediately before accepting a purchaser's deposit for a Mh-Unit?

1. Opening an escrow account and preparing mutually endorsed escrow instructions

2. Providing a tour of the manufactured home

3. Obtaining pre-approval for financing

4. Conducting a background check on the buyer

The correct answer is: Opening an escrow account and preparing mutually endorsed escrow instructions

In the context of accepting a purchaser's deposit for a manufactured home unit, opening an escrow account and preparing mutually endorsed escrow instructions is essential because it establishes a formal and secure process for handling the buyer’s deposit. This step ensures that both parties are protected during the transaction, as the escrow account holds the funds until all conditions of the sale are met. The mutually endorsed escrow instructions detail the terms of the agreement and specify how the deposit will be managed, which helps prevent misunderstandings or disputes later on. In contrast, providing a tour of the manufactured home, obtaining pre-approval for financing, and conducting a background check on the buyer are valuable steps in the purchasing process but do not directly relate to the immediate requirements for accepting a deposit. Each of these actions serves a different purpose in facilitating the sale and ensuring that the buyer is an informed and prepared participant in the transaction. However, they do not establish the necessary legal and financial framework that an escrow account provides right before accepting a deposit. Therefore, the correct choice focuses on the foundational requirements for a secure and compliant transaction.