Escrow & TitleIntermediateDelaware Exam

A Delaware property has an outstanding mechanic's lien filed by a contractor. How does this affect the sale?

AThe lien does not affect the sale if the buyer is unaware of it

BThe lien must be paid off or released before a clear title can be conveyed — typically satisfied from the seller's proceeds at closingCorrect

CThe buyer automatically assumes the lien upon purchase

DThe lien expires automatically after 30 days from the closing date

Why The lien must be paid off or released before a clear title can be conveyed — typically satisfied from the seller's proceeds at closing Is Correct

Answer B: The lien must be paid off or released before a clear title can be conveyed — typically satisfied from the seller's proceeds at closing

A mechanic's lien is a legal claim against property filed by contractors or suppliers who were not paid for work performed. In Delaware, the lien attaches to the title and must be resolved (paid or released) before clear title can pass to the buyer.

Exam Tip: Escrow & Title

Escrow questions test the neutral third-party role and the sequence of closing events. Remember that the escrow agent acts as a dual agent for both buyer and seller and cannot advocate for either side.

Key Escrow & Title Terms in This Question

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

Title Insurance

Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.

People Also Study

Key Terms to Know

Title Insurance

Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

Contingency

A condition in a purchase contract that must be satisfied before the sale can proceed to closing.

Encumbrance

Any claim, lien, charge, or liability attached to real property that affects its value or limits its use.

Math Concepts

Profit & Loss

State-Specific Concepts

Mechanic's Lien

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