American Land Title Association (ALTA) Practice Exam 2025 – Your Comprehensive All-in-One Guide to Success!

Reviewing the title records before closing is crucial primarily to identify any potential issues or defects that could affect ownership. This process involves examining documents such as previous deeds, liens, judgments, and other encumbrances that may be recorded against the property.

By performing this due diligence, both the buyer and the lender can ensure that the property is free from legal complications that could disrupt their ownership rights or lead to financial loss in the future. Uncovering potential issues such as undisclosed liens, boundary disputes, or unresolved claims allows parties to address these problems before the transaction is finalized. This proactive approach helps safeguard against future legal disputes and ensures a smoother transfer of ownership.

In contrast, assessing market value, confirming buyer financing, and determining property tax obligations, while important in their own right, do not directly relate to the clarity of title. These elements mainly pertain to the financial assessment and obligations associated with purchasing the property. Thus, the primary focus of reviewing title records is on ensuring the integrity and validity of ownership rights.