What it is:
A preliminary title report reveals any issues with a title that need to be dealt with by the seller in order to deliver a clear title. It gives details such as ownership history, liens, and easements. The title company gathers this report by searching existing property records at the county recorder's office.
Why you need one:
This report is required for a title insurance company to issue a title insurance policy. Most lenders require borrowers to purchase title insurance coverage to protect their interest in a property. It's customary in many areas for a seller to pay for this policy.
What if the preliminary title report isn't clear?
This is really where the expertise of the title officer comes into play. Ultimately, it is the title officer’s job to work with the seller to clear any liens that may exist on the preliminary title report. If the liens cannot be cleared, they may be listed as “exclusions” on a title insurance policy, which may influence a lender’s decision to lend on the property.
After receiving the report, we encourage you to reach out to the title officer with any questions you may have.
Below are a few questions you might want to consider asking the title officer:
- Are there any liens associated with this title?
- Are there any encroachments associated with this title?
- Are there any encumbrances associated with this title?
- Are there any delinquent taxes?
- Is there anything on this report that I should be concerned about before removing my inspection contingency?