Nationwide Mortgage Licensing System (NMLS) Practice Exam

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What does the term "deed" represent in real estate transactions?

A legal document indicating ownership
A loan approval document
An insurance policy
A creation of property taxes

The correct answer is: A legal document indicating ownership

The term "deed" in real estate transactions represents a legal document that indicates ownership of a property. A deed serves as an official record that transfers title from one party to another and outlines the rights associated with the property. It includes vital information such as the names of the parties involved, a description of the property, and the signature of the grantor (the person transferring the property). The deed solidifies the legal ownership for the new owner and is a crucial component in the process of buying and selling real estate. This distinction is fundamental in real estate law, as it helps to ensure that ownership is clear and legally recognized.