What role does a title company play in a real estate transaction?

In a real estate transaction, the title company serves a critical function by ensuring that the title to the property is clear of any liens or encumbrances. This involves a detailed examination of public records to verify ownership and confirm that there are no outstanding debts, judgments, or claims against the property that could affect the buyer's rights. By conducting this due diligence, the title company protects the interests of both the buyer and the lender, ensuring that the transaction can proceed without legal complications related to the title.

A clear title is essential for the transfer of ownership, as it confirms that the seller has the right to sell the property and that the buyer will receive full ownership without unexpected claims from third parties. The title company also usually issues title insurance, which provides additional security against future claims to the title. In summary, their role is fundamental in establishing a safe and smooth transfer of property ownership, thereby facilitating confidence in real estate transactions.