What is the primary purpose of title insurance in real estate transactions?

The primary purpose of title insurance in real estate transactions is to protect against losses that may arise from defects in the title. This includes issues such as liens, outstanding mortgages, claims of ownership by others, or other problems that could affect the buyer's legal ownership of the property. Title insurance provides coverage that ensures the buyer or lender is financially protected against unexpected legal challenges or losses related to the property’s title.

Title insurance works by conducting thorough title searches before the transaction and providing a policy that covers the risks that could surface even after the search has been completed. This is crucial in real estate because undisclosed or hidden issues can emerge after the purchase, potentially leading to significant financial loss. The one-time premium paid for title insurance thus serves as a safeguard for the insured parties throughout their ownership of the property.

In contrast, other options such as guaranteeing property appreciation or providing a record of ownership history do not capture the essence of what title insurance is meant to do. While these aspects are relevant within the realm of real estate, they do not directly relate to the protection against title defects, which is the cornerstone of title insurance's function. Similarly, ensuring compliance with zoning laws is important for property development and use but falls outside the scope of title insurance's main purpose