A title examination ensure that the property title is legitimate. This is done so that the buyer is reassured that they are the rightful owner of property they are purchasing. A title company will do an examination of the property records to confirm that the seller does own the property legally, and that no one else can claim full or partial ownership of the property by searching the county recorder’s office for outstanding mortgages and liens, as well as for restrictions, easements, leases or other issues that may impact the property or it’s owners.
Title companies also search the county clerk of courts records for outstanding case judgments and the county treasurer’s office for unpaid taxes and confirm the tax figures and assessments. The company will search the federal bankruptcy records when a situation warrants it.
If a title defect is found, it must be "cured". Often this can be done by having the parties sign a new quitclaim deed. Please see my guide here about quitclaim deeds.
Once a title examination has been done, the title insurance company issues a title insurance policy or binder. The title insurance company will insure and guarantee that from the date of the policy, back to the beginning of time, there are no defects, liens or encumbrances on the title and that the title is marketable. Title insurance differs from other forms of insurance because it insures against loss caused by something that has occurred in the past, while most other forms of insurance insure against loss caused by something that may occur in the future.