Final answer:
An abstract of title is a summary of all transfers, conveyances, legal proceedings, and other facts relied on as evidence of title. It shows the continuity of ownership and any potential issues that may affect the title. Title insurance provides protection against financial loss resulting from defects in the title.
Step-by-step explanation:
An abstract of title refers to a summary of all transfers, conveyances, legal proceedings, and any other facts relied on as evidence of title, showing continuity of ownership, together with any other elements of record which may impair title.
For example, when buying a property, it is important to ensure a clear and marketable title. The abstract of title provides a detailed history of the property's ownership, including any liens, encumbrances, or legal issues that may affect the title.
In real estate transactions, title insurance may also be used to protect the buyer and lender against financial loss resulting from defects in the title. This ensures that the buyer receives a clear and marketable title to the property.