Nationwide Mortgage Licensing System (NMLS) Practice Exam

In a real estate transaction, which document serves as the transfer of ownership?

1. Deed

2. Mortgage

3. Note

4. Title

The correct answer is: Deed

The correct choice is the deed, as it is the legal document that facilitates the transfer of ownership from one party to another in a real estate transaction. When a property is sold, the seller executes a deed, which must be delivered to the buyer to officially convey ownership. The deed outlines the specifics of the transaction, including the names of the parties involved, a description of the property, and any warranties or covenants associated with the title. While the other options play significant roles in real estate transactions, they do not serve as the document that transfers ownership. The mortgage is a security instrument that creates a lien on the property and ensures that the lender can take possession if the borrower defaults on the loan. The note is a written promise to repay the loan and may contain the terms of the loan agreement, but it does not convey ownership. The title, while it represents the legal rights to the property, is not a document itself but rather an abstract concept that indicates ownership and the right to use the property. Hence, the deed is the specific instrument that legally effects the transfer of ownership.