Buying a home is an exciting process, especially once you’re under contract. But before you receive the keys, there are several critical steps that must take place behind the scenes.
One of the most important—and often overlooked—is reviewing the preliminary title report. If you’re unfamiliar with what this is or why it matters, here’s what you need to know.
What Is a Preliminary Title Report?
A “title” represents the legal ownership of a property and the history of that ownership over time. Once a purchase agreement is signed, a title company or real estate attorney conducts a detailed review of the property’s title. Their goal is to identify any issues that could prevent the property from being legally transferred to you. The findings are compiled into a preliminary title report, which is then provided to the buyer—typically within a few days.
It’s important to review this report promptly. In most transactions, buyers have a limited window to raise concerns or request corrections. It’s also important to understand that a preliminary title report is not title insurance. Instead, it identifies any potential issues that must be resolved before a title insurance policy can be issued at closing.
Why Is a Preliminary Title Report Important?
The primary purpose of the report is to confirm that the seller has clear and legal ownership—and that no one else has a claim to the property.
For example, the report may reveal:
- Ownership disputes
- Outstanding debts tied to the property
- Legal restrictions that could affect your use of the home
Without resolving these issues, the property cannot be transferred cleanly to a new owner.
Common Issues Found in a Title Report
Your real estate agent and title professional will guide you through the report, but here are some of the most common items to look for:
- Mortgage Liens: When a homeowner has a mortgage, the lender holds a legal claim (lien) on the property until the loan is paid off. This must be satisfied before closing.
- Tax Liens: Unpaid property taxes—or other tax obligations—can attach to the property. These must be cleared before ownership can transfer.
- Easements: Easements allow others to use a portion of the property for a specific purpose, such as utilities or shared access. While common, they can impact how you use the property.
- Encroachments: This occurs when a structure (like a fence or driveway) crosses property lines onto a neighboring parcel. These issues should be addressed prior to closing.
- HOA Rules (CC&Rs): If the home is part of a homeowners association, the report may include Covenants, Conditions, and Restrictions. These outline rules governing the property, such as exterior changes or usage limitations.
How Are Title Issues Resolved?
If any concerns appear in the report, timing is critical. You’ll work closely with your real estate agent, the seller, and the title company or attorney to resolve them.
In many cases:
- Sellers will pay off liens or outstanding debts
- Boundary or encroachment issues can be negotiated or corrected
- Easements may be clarified or, in some cases, modified
If a serious issue cannot be resolved, buyers typically have the option to withdraw from the contract—especially if a title contingency is in place.
Bottom Line
A preliminary title report is a critical safeguard in the homebuying process. It ensures that you’re purchasing a property with clear ownership and without hidden legal or financial complications. Skipping over this step—or failing to review it carefully—can lead to significant problems down the road.
Have Questions? Let’s Talk!
If you have questions about a title report, the homebuying process, or need a referral to a reputable title attorney, reach out to Scott and the Smolen Team. We’re here to guide you every step of the way and ensure your transaction is handled smoothly, professionally, and with your best interests protected.
