California Real Estate Practice Exam

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The creation of escrow is conditional on?

Execution of a binding contract
Approval of mortgage application
Completion of property inspection
Final property appraisal

The correct answer is: Execution of a binding contract

When creating an escrow, a binding contract must be executed in order for the escrow to be considered valid. This means that the agreement between the parties involved must be in writing and signed by all parties. Options B, C, and D are incorrect because they do not involve the binding agreement necessary for the creation of an escrow. Option B mentions mortgage application approval, which is not necessary for the creation of an escrow. Option C mentions property inspection, which is also not a condition for the creation of escrow. Option D mentions a property appraisal, which is important in determining the value of the property but is not a requirement for creating an escrow.