Idaho Real Estate Practice Exam

Which document typically finalizes a property transaction and transfers ownership from the seller to the buyer?

1. Mortgage agreement

2. Deed

3. Escrow agreement

4. Title insurance policy

The correct answer is: Deed

The deed is the document that finalizes a property transaction and transfers ownership from the seller to the buyer. When a property is sold, the seller prepares a deed, which is a legal document that outlines the details of the transfer. It specifies the names of the buyer and seller, the legal description of the property, and it must be signed by the seller to be valid. Once the deed is executed, it is typically delivered to the buyer, who then must have it recorded with the local county recorder's office to establish their legal ownership. This recording process strengthens the buyer’s claim to ownership and protects against future disputes regarding property rights. In contrast, a mortgage agreement is related to the financing of the property and outlines the loan terms between the borrower and lender. An escrow agreement involves a third party holding funds and documents during the transaction, ensuring that both parties meet their obligations before finalizing the sale. Lastly, a title insurance policy protects against losses arising from issues with the property title but does not facilitate the transfer of ownership itself.