Kovats Real Estate School Practice Test 2025 - Free Real Estate Practice Questions and Study Guide

A title company plays a crucial role in real estate transactions, primarily focusing on the title examination and ensuring that the property title is clear of any liens or encumbrances. This process involves conducting thorough research on public records to verify the property's history, ownership, and any claims that may affect the title.

By ensuring that the title is clear, the title company helps protect both the buyer and the lender from potential disputes that could arise after the transaction is completed. A clear title means that the property is free of legal claims, allowing the buyer to take full ownership without facing future legal challenges related to the property's title. This role is essential because any unresolved issues with the title could lead to financial loss or complications after the sale.

While the other options mention important aspects of the real estate process, such as negotiating price, conducting appraisals, and providing homeowners insurance, these are not the primary functions of a title company. Instead, their focus is specifically on title examination and ensuring the overall integrity of the title transfer process.