ContractsIntermediateNorth Carolina Exam

A NC real estate transaction where the closing attorney discovers the seller's deed was fraudulently obtained should result in:

AProceeding with the closing since the attorney is not responsible for prior fraud
BThe closing being halted and the fraud reported to appropriate authoritiesCorrect
CInsisting the buyer accept the risk
DRecording the deed immediately to establish new title

Why The closing being halted and the fraud reported to appropriate authorities Is Correct

Answer B: The closing being halted and the fraud reported to appropriate authorities

A closing attorney who discovers fraud in the chain of title must halt the closing and take appropriate action. Proceeding with a closing while knowing the deed was fraudulently obtained could expose the attorney to liability.

Exam Tip: Contracts

Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.

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