What is the primary function of a title company in a real estate transaction?

The primary function of a title company in a real estate transaction is to conduct title searches and provide title insurance. This role is crucial because the title company ensures that the property being sold has a clear title, meaning that there are no outstanding liens, claims, or issues that could affect ownership. A comprehensive title search involves the examination of public records to confirm the legal ownership of the property and to identify any encumbrances or legal obstacles.

Additionally, title insurance protects buyers and lenders from potential future claims against the property that were not identified during the title search. This coverage is particularly important as it safeguards the financial interests of both parties in the transaction, offering peace of mind that the ownership is being legally confirmed and secured. This is why the option focusing on title searches and insurance is recognized as the primary function of a title company in real estate transactions.

Other roles in a real estate transaction, such as evaluating property values, assisting in mortgage approval, and negotiating purchase agreements, while important, do not fall under the core functions of a title company. These processes are typically handled by appraisers, mortgage brokers, and real estate agents, respectively.