Idaho Real Estate Practice Exam

What document is completed by the beneficiary to certify that a loan secured by a deed of trust has been fully repaid?

1. Deed of trust

2. Notice of default

3. Deed of reconveyance

4. Trustee's receipt

The correct answer is: Deed of reconveyance

The document that is completed by the beneficiary to certify that a loan secured by a deed of trust has been fully repaid is the deed of reconveyance. This document serves as a formal declaration that the debt has been satisfied, and ownership rights are being returned to the borrower. When a borrower repays their loan in full, the beneficiary (usually the lender) is responsible for filing the deed of reconveyance. This ensures that the property is no longer encumbered by the original deed of trust, effectively releasing the lien on the property and allowing the borrower to have clear title. This process is important because it provides legal proof that the borrower has met their obligations under the loan agreement, resolving any future disputes regarding ownership or claims against the property. The deed of reconveyance thus serves a critical role in real estate transactions, as it reinstates the borrower’s full rights to the property.