A title company researches the property to determine if there are any liens on a property, determine the true owner of the property, and provide insurance to a buyer, seller, or lender against claims over ownership.
The title company can identify a host of issues with the property. A tax lien can take extra time to clear up, causing the timeline to be extended, which is why we usually see time extensions as part of the purchase agreement. The title company and your attorney will work through these issues. Sometimes an IRS lien will appear, and it must be dealt with or you can’t close.
The title company may find an issue with the title that can’t be resolved. Perhaps one of the owners died, and there is no clear chain of ownership. The title company may not see this as a big risk and will insure over the risk. If, in the future, the family of that previous owner shows up, the title company will pay any costs to resolve the issue.