Affiliate Broker Tennessee (TN PSI) National Practice Exam `

Which type of agent is considered an escrow officer?

1. General agent

2. Limited agent

3. Universal agent

4. Seller's agent

The correct answer is: Limited agent

An escrow officer functions as a neutral third party in a real estate transaction, focusing on the handling and management of funds and documents to ensure that all parties meet their contractual obligations. The position of an escrow officer is categorized as a limited agent because their role does not extend to representing any party in a transaction but rather facilitating the process. A limited agent is specific to a defined task or duty, which in the case of an escrow officer is to manage the escrow process. This involves holding the earnest money, preparing documents for closing, and ensuring that all conditions of the sale are met before disbursing any funds. The escrow officer is bound by fiduciary duties of impartiality and confidentiality related to the escrow account but does not act on behalf of either the buyer or the seller in terms of negotiating transaction terms or advocating for their interests. In contrast, a general agent would have broad authority to act on behalf of a principal in various matters, while a universal agent would have representation across all matters concerning the principal. A seller's agent specifically represents the interests of the seller, which does not align with the neutral role of an escrow officer. Therefore, the correct designation of an escrow officer as a limited agent highlights their focused, impartial role in a real estate transaction