What type of transactions typically require notarization?

The correct choice highlights that notarization is generally required for any legal document that needs verified proof of identity. This is because the primary role of a notary public is to ensure that the individuals signing the document are who they claim to be and that they are doing so willingly and without coercion. Notarization helps prevent fraud and provides a level of authenticity to the document.

Documents commonly requiring notarization include contracts, real estate transactions, powers of attorney, and affidavits, all of which necessitate the notary confirming the identity of the signers. By ensuring identity validation, notarization serves as an essential safeguard in the legal process.

Regarding the other options, while real estate transactions are often notarized, they are not the only type of documents that require notarization. Similarly, financial agreements and wills are among the documents frequently notarized, but not exclusively so. Lastly, limiting notarization to only documents involved with federal regulations overlooks the broader applicability of notarization across various state and local legal documents. Therefore, option C provides a more comprehensive understanding of the notarization process as it relates to legal documents.