Idaho Real Estate Practice Exam

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What document evidences a debt owed by the property purchaser?

Purchase agreement
Promissory note
Title deed
Escrow agreement

The correct answer is: Promissory note

The promissory note serves as a document that evidences a debt owed by the property purchaser. It is a written promise to pay a specified amount of money to a lender under defined terms, including interest rates and repayment conditions. When a buyer takes out a mortgage or any loan to finance the purchase of real estate, they typically sign a promissory note as part of the transaction, which formally outlines the commitment to repay the borrowed funds. The purchase agreement outlines the terms of the sale, such as sale price and conditions, but does not itself create or represent the specific debt. The title deed is a legal document that establishes ownership of the property, while the escrow agreement is used to designate how funds and documents are handled between parties before the transaction is finalized. Therefore, the promissory note is the most direct evidence of the debt obligation between the borrower and the lender in a real estate purchase.