What is the primary function of title insurance in a property transaction?

The primary function of title insurance in a property transaction is to protect the buyer against claims on the title. This insurance provides peace of mind by safeguarding the buyer from potential legal issues or disputes regarding property ownership that may arise after the purchase, such as unknown liens, easements, or claims from previous owners.

When a buyer purchases title insurance, they are essentially securing a policy that ensures that they hold a clear and rightful ownership of the property. If a claim does arise, the title insurance company will defend against the claim and cover legal expenses, as well as any losses incurred, up to the policy limit. This protection is vital in real estate transactions because it helps buyers avoid significant financial setbacks due to issues that may be uncovered after closing.

Other options do not accurately reflect the fundamental purpose of title insurance. Gathering funds for closing, ensuring a good selling price, and facilitating financing are important processes in a real estate transaction, but they do not address the crucial protective role that title insurance plays in ensuring ownership rights.