Idaho Real Estate Practice Exam

Which type of agreement must be recorded in order to provide public notice of property rights in Idaho?

1. Lease Agreement

2. Purchase Agreement

3. Mortgage Agreement

4. Deed of Trust

The correct answer is: Deed of Trust

Recording a Deed of Trust is essential in Idaho as it establishes a public record of the financial interest in a property associated with a loan. This document is crucial because it provides notice to third parties regarding the lender's security interest in the property, which can protect the lender's rights against claims from other creditors or purchasers. When a Deed of Trust is recorded, it creates a lien on the property, ensuring that if the borrower defaults, the lender has the legal right to foreclose on the property. This transparency is vital in real estate transactions, as it clearly informs all parties about existing claims against the property, helping to prevent disputes over ownership and interests. In contrast, while Lease Agreements, Purchase Agreements, and even Mortgages may be significant in real estate transactions, they do not require recording to provide public notice of property rights in the same way. Lease Agreements are typically governed by private contractual obligations, and Purchase Agreements primarily serve as contracts that facilitate the transfer of ownership, rather than notifying third parties of property interests. Mortgages, while they do provide some notice, are often recorded differently than a Deed of Trust and are not the primary mechanism used in Idaho to secure a lender's interest in the property.