What does novation involve in a real estate transaction?

Novation in a real estate transaction refers to the act of replacing an existing obligation with a new one, effectively extinguishing the original obligation. In the context of option B, a new note between the buyer and lender signifies this concept well, as it involves creating a new financial obligation that takes the place of the previous agreement. This is common in cases where the buyer assumes a mortgage and a new loan agreement is executed, confirming the lender's acceptance of the new borrower and the terms that govern this new relationship.

In contrast, the other options do not accurately reflect the primary purpose of novation. A new deed transfer implies a change in property ownership but does not necessarily involve the substitution of obligations. A loan assumption allows the buyer to take over the existing loan but does not create a new loan agreement; rather, it continues the original obligation, with the lender's consent. A property inspection assesses the condition of the property but does not involve any contractual changes between parties. Thus, option B accurately captures the essence of novation within the context of real estate transactions.