Preliminary title report

Our previous post explained the changing title industry. This post discusses the preliminary title report which is prepared by the title company.

A preliminary title report is an order to issue a title insurance policy covering a particular property with certain exceptions. The title insurance policy will guarantee the ownership and marketability of the property as described in the policy as of the effective date. The title company issues the preliminary title report based on the street address and/or the assessor’s parcel number of the property. In most cases, this information is provided to the title company by the seller’s realtor. Many people do not realize it is the seller’s and buyer’s responsibility to verify the legal description of the property being sold.

How many people are capable of verifying the legal description of what is to be sold or purchased?

Is all of the property intended for sale actually described in the legal description shown in the preliminary title report? Is too much property included in the legal description? Are all of the necessary easements and rights included with the legal description?

The title insurance policy does not insure the exceptions, such as easements, agreements, leases, or mortgages. Since these exceptions may point to potential problems with the purchase, it is important to study each exception. How do the exceptions affect the buyer’s intended use of the property? Do all of the exceptions shown actually affect the property being sold? The preliminary title report is the basis by which the title insurance policy is issued. A flawed preliminary title report means you will receive a flawed title insurance policy. A little time invested now reviewing the preliminary title report may save you many problems and delays in the future.

A land surveyor with title analysis experience can assist you in reviewing and understanding the preliminary title report. These questions, and many more, must be asked and answered before you accept the preliminary title report. If you would like someone local to review your preliminary title report consider contacting us. We are experienced in title analysis.

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