Escrow & TitleIntermediateDelaware Exam

What is a 'lis pendens' and how does it affect a Delaware property sale?

ASimply a routine document confirming that title is already clear and the sale may proceed without delay, which is broadly consistent with standard practice statewide

BA notice of pending litigation recorded in the public records that alerts potential buyers and lenders that the property's title is subject to an unresolved lawsuitCorrect

CA legal action to recover possession of property

DA court order preventing the immediate sale of a property

Why A notice of pending litigation recorded in the public records that alerts potential buyers and lenders that the property's title is subject to an unresolved lawsuit Is Correct

Answer B: A notice of pending litigation recorded in the public records that alerts potential buyers and lenders that the property's title is subject to an unresolved lawsuit

A lis pendens clouds title, creating a significant impediment to sale because any buyer takes subject to the outcome of the pending litigation. Most buyers and lenders will not close a transaction with an active lis pendens on title.

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.