Escrow & TitleIntermediateNorth Carolina Exam

In North Carolina, the deed of trust is used instead of a mortgage. The deed of trust involves how many parties?

ASimply two parties only, omitting the trustee that a North Carolina deed of trust actually adds as a third party

BThree partiesCorrect

CFour parties

DFive parties

Why Three parties Is Correct

Answer B: Three parties

A deed of trust involves three parties: the borrower (trustor), the lender (beneficiary), and a neutral third-party trustee who holds bare legal title until the loan is repaid.

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).

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Key Terms to Know

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).

Debt-to-Income Ratio (DTI)

A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.

Escrow

A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.

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