Humber/Ontario Real Estate Course 3 Exam Practice

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What is the primary purpose of a title search in a real estate transaction?

To determine the condition of the property.
To confirm the property boundaries.
To verify the seller's legal ownership and reveal any encumbrances.
To ensure the property complies with zoning laws.
To assess the property’s market value.
To check for any plumbing issues in the property.

The correct answer is: To verify the seller's legal ownership and reveal any encumbrances.

The primary purpose of a title search in a real estate transaction is to verify the seller's legal ownership and to reveal any encumbrances on the property. This process is crucial because it establishes a clear chain of title, ensuring that the seller has the right to sell the property. The title search will identify any liens, mortgages, easements, or other claims that may affect the ownership of the property. Understanding these encumbrances is vital for both the buyer and the lender, as they could impact the buyer's rights or future use of the property. A title search does not focus on the physical condition of the property, boundaries, zoning compliance, or market value, which are important aspects of real estate transactions but fall outside the scope of what a title search specifically addresses. By confirming legal ownership and uncovering any potential issues with the title, the title search helps protect buyers from future disputes, allowing for a smoother transaction process.