Which role does title insurance serve during real estate transactions?

The function of title insurance is to protect property owners and lenders from potential legal claims to property ownership that might arise. When a property is bought, title insurance provides a guarantee that the title is clear—or free from defects, liens, or disputes regarding ownership. This protection is crucial because it helps to safeguard the financial investment made in the property.

Title insurance investigates the property's title history before the transaction to identify any issues that could affect ownership. If a dispute over property ownership or a claim from a previous owner arises after the purchase, the title insurance policy will cover legal fees and any losses incurred, thereby ensuring that the buyer retains ownership of their property.

In a real estate transaction, this protection is vital as it minimizes the buyer's risk, making them more secure in their investment. Other options do not accurately reflect the purpose of title insurance, which specifically focuses on ownership issues rather than sale prices, property taxes, or rental agreements.