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

In a real estate transaction, the title company plays a crucial role in ensuring that the title to the property is clear of any liens or other encumbrances. Their primary responsibilities include verifying ownership of the property by conducting a thorough title search, which examines public records to confirm the legal ownership and identifies any claims or issues with the title. This verification process is essential to guarantee that the seller has the right to sell the property and that the buyer will receive a clear title upon purchase.

Additionally, the title company issues title insurance, which protects the buyer and lender from any future claims against the title that could emerge after the transaction is completed. This insurance provides peace of mind, knowing that if any issues arise relating to the property’s title, such as undiscovered liens or claims, the policy will cover legal fees and losses up to the insurance amount.

In contrast, other options, such as processing mortgage applications, managing rental agreements, and conducting property inspections, do not align with the core functions of a title company. These tasks fall under the purview of lenders, property managers, or home inspectors, respectively. Thus, the title company's role is distinctly centered around title verification and insurance, making that option the correct answer.