But what happens if the seller does not have a "clear title" to convey? Perhaps there was an irregularity in one of the past transactions involving the property. Suddenly, the buyer may find himself out of thousands of dollars - and not owning any property.

Today, that does not happen -- if a title company is involved. A title company's job is to search out every past transaction involving the property to ensure that clear title is passed from owner to owner, and that the current seller does hold clear title to the property. Title company examiners trace the ownership of the property through its entire history. They make sure the title is clear. In the past, this was done manually, however, today computerized records make the task easier ... and more reliable.

Besides uncovering title defects (called "clouds") relating to a property's ownership, title searches also detect liens. For instance, suppose a contractor built a room addition to a home and was not fully paid for his work. If he filed a lien against the property, it would be on record with the county recorder - and should be discovered by the title examiner during the search. The title company would then notify the escrow company of the problem, and the seller would resolve the lien or risk losing the buyer.