West Virginia Mortgage Law Practice Test

What is the term for the moneys used to fund the disbursement of settlement proceeds deposited and credited to a settlement agent's account?

1. Settlement funds

2. Closing costs

3. Cash funds

4. Cash to close

The correct answer is: Settlement funds

The term "settlement funds" specifically refers to the moneys that are used to fund the disbursement of settlement proceeds that are deposited and credited to a settlement agent's account. In real estate transactions, settlement funds are crucial because they ensure that all parties involved in the transaction receive the payments that are due to them at closing. This can include amounts owed to the seller, real estate agents, and various other service providers. Closing costs typically refer to the various fees associated with completing the property transaction, which may encompass services such as title insurance and appraisal fees, rather than the funds themselves. Cash funds and cash to close could be misleading as they may imply different contexts. Cash to close typically means the total amount a buyer needs to bring to the closing, which can include down payments and closing costs, but does not specifically signify the funds deposited into the settlement agent’s account for distribution. In summary, the precise usage of "settlement funds" aligns perfectly with the context of funds designated for disbursement in real estate transactions, making it the correct term in this scenario.