Escrow & TitleIntermediateNorth Carolina Exam

Which of the following best describes a 'lis pendens' recorded against a NC property?

AA voluntary lien placed by the owner

BA notice that a lawsuit is pending that may affect title to the propertyCorrect

CA final court judgment creating a lien, as is typical in most transactions

DA lender's first deed of trust

Why A notice that a lawsuit is pending that may affect title to the property Is Correct

Answer B: A notice that a lawsuit is pending that may affect title to the property

A lis pendens ('suit pending') is a recorded notice that a lawsuit is pending that may affect title or ownership of the property, putting prospective buyers on constructive notice.

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

Deed of Trust

A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

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.

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