Housing and Community Development (HCD) Practice Exam

When can an escrow period be extended?

1. Subject to compliance by only the buyer

2. As extended by written mutual consent and notice to the escrow agent

3. Only upon state department approval

4. During a verbal agreement between parties

The correct answer is: As extended by written mutual consent and notice to the escrow agent

An escrow period can be extended by mutual consent of both parties involved in the transaction, which is typically formalized through written documentation. This ensures that all parties are aware of the changes to the terms of the agreement, maintaining clarity and reducing the potential for disputes. The escrow agent also needs to be notified of this extension, as they are responsible for managing the escrow process and ensuring compliance with the agreed-upon terms. The requirement for written mutual consent is an important aspect of maintaining legal and contractual integrity, allowing for a clear record of all changes to the original agreement. This process protects not only the interests of the buyer and seller but also the responsibilities of the escrow agent. In contrast, reliance on compliance from only one party or verbal agreements does not create the same level of formality or assurance. State department approval typically involves regulatory requirements that may not pertain to the routine management of escrow periods. Thus, extending the escrow period in a structured and documented manner is crucial for ensuring transparency and accountability in housing transactions.