What is the purpose of a title search in a real estate transaction?

The purpose of a title search in a real estate transaction is to ensure that the property’s title is clear of liens or legal claims. A title search is a thorough examination of public records related to the property, which helps identify the legal owner and reveal any potential issues that could affect the transfer of ownership. This includes checking for unpaid taxes, judgments, and other encumbrances that could limit the buyer's rights or diminish the property's value. By ensuring that there are no outstanding legal claims or defects in the title, both buyers and sellers can engage in the transaction with confidence, knowing that ownership will be transferred without unforeseen complications once the sale is complete.

Understanding the status of the title is critical for safeguarding investments, as complications arising from title issues could lead to legal disputes or financial burdens in the future. Hence, conducting a title search is a fundamental step in the real estate process to secure a clear and marketable title before a transaction is finalized.