Preliminary Title Reports: Everything You Never Knew You Wanted to Know

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Pop quiz time: What is a preliminary title report, and why do you need one?

If you’ve ever sold a home, you’ve dealt with a preliminary title report before. But if you’re like most sellers, this legal document was just one more file in a very tall stack of papers.

However, this particular document is among the most important components involved in any home sale.

Read on to learn how to get and read a preliminary title report.

What is a Preliminary Title Report?

When it comes to home sales, not many pieces of paper are more significant than a property’s title.

Why? Because the title establishes ownership of a property and goes through decades of public records to look for court judgments, liens, tax records, bankruptcy filings, divorce decrees, wills, trusts, or other issues that may impact ownership.

A preliminary title report documents who currently owns a home. It includes any identified problems with the home’s title and details of any issues that the title insurance policy won’t cover — such as encumbrances and liens.

A preliminary report also notes any actions that the seller or owner must take in order to fix any outstanding problems. Without a clear title, a buyer can’t get the title insurance they need to purchase the property.

What Does a Title Report Look Like?

Preliminary title report formats may vary, but all contain important legal information, such as:

  • A legal description of the property and its boundaries in the context of nearby intersections and streets
  • Any outstanding property taxes, mortgages, and other liens
  • Any restrictions, such as historic oversights or planning requirements
  • For condos, details on storage, parking, common areas, and easements
  • For condos, covenants, conditions, and restrictions (CC&Rs)

Why are Preliminary Title Reports Important?

Preliminary reports identify any issues or potential problems with a home’s title. It lists title problems that a title insurance policy won’t cover, such as liens and encumbrances. It will also detail actions the seller or owner must take to remedy these problems.

Preliminary title reports form a component of a seller’s disclosure packet. They contain key information for both seller and buyer, such as:

  1. Who actually owns the property
  2. If other individuals or entities (such as banks, construction crews, or lenders) hold liens on your house that you must clear before the title changes hands
  3. If you need to pay any outstanding taxes

Documents related to a property’s title are packed with real estate and legal jargon, which can make them difficult to read.

But don’t stress: Preliminary reports’ main purpose lies in confirming a property’s ownership, and making sure that the buyer is covered in case competing for ownership claims surface later.

How to Get a Preliminary Title Report

Who orders the preliminary title report? The listing agent orders the report through the title company that the seller and buyer have agreed to use.  Sometimes, a title company will defer payment until the home sells.

What if you’re bidding on a house that’s listed on an auction site? Foreclosure properties are usually sold as-is, so you must contact a local title company and request a full title search of all the property’s public records.

If you’re not sure what to look for, ask the title company or a real estate attorney to help you understand the report.

reading a preliminary title report

Preliminary Title Report Cost

The listing agent will order the report through the title company that’s listed in the Purchase and Sale Agreement.

Costs vary by company. As a general rule, expect to pay from $75 to $250 for a preliminary title report.

However, some title companies offer them for free, as long as you use their company to generate title insurance (usually part of the seller’s closing costs).

Buyers can Back Out Due to a Preliminary Title Report

What happens when a title report comes back and reflects “clouds” or potential ownership problems? If issues arise, the buyer can back out of the sale.

Common issues include:

  • Mechanic’s liens
  • Bankruptcies
  • Past-due child or spousal support
  • Delinquent taxes

When a preliminary title report comes back chock-full of issues, your first reaction may be panic… especially if the home buyer backs out of the sale.  But don’t let a title report slow down your closing!

There’s a better option: Sell to HomeGo as-is. We’ll help you resolve title issues, so you don’t have to lose out on a sale. You’ll receive a transparent offer right away and your home will close quickly and easily.

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The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.

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