Manufactured Housing Practice Test

What is the maximum ownership interest a dealer can have in an escrow company?

1. 10%

2. 5%

3. 15%

4. No ownership interest necessary

The correct answer is: 5%

The maximum ownership interest a dealer can have in an escrow company is 5%. This regulation is in place to prevent conflicts of interest and to ensure that escrow companies remain impartial and act in the best interest of their clients. By limiting a dealer's interest, it safeguards the integrity of the escrow process, ensuring that both buyers and sellers can trust that their transactions are being handled fairly and independently. Ownership interest beyond this percentage may lead to situations where a dealer could exert undue influence over the escrow company's operations, ultimately compromising the neutrality that is essential for effective escrow services. Thus, the 5% limit helps maintain the necessary separation between dealers and escrow companies, fostering a more secure environment for real estate transactions.