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What is a Preliminary Title Report? |
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Preliminary Reports The preliminary report will provide you the opportunity, prior to purchase, to review matters affecting your property which will be excluded from coverage under your title insurance policy unless removed or eliminated before you purchase. To help you better understand this often bewildering subject, the California Land Title Association has answered some of the questions most commonly asked about preliminary reports. What is a Preliminary Report? What role does a Preliminary Report play in the real estate process? The preliminary report lists, in advance of purchase, title defects, liens and encumbrances which would be excluded from coverage if the requested title insurance policy were to be issued as of the date of the preliminary report. The report then may be reviewed and discussed by the parties to a real estate transaction and their agents. Thus, a preliminary report provides the opportunity to seek removal of items referenced in the report which are objectionable to the buyer prior to purchase. When and how is the Preliminary Report produced? The process calls for the assembly and review of certain recorded matters relative to both the property and the parties to the transaction. Examples of recorded matters include a deed of trust recorded against the property or a lien recorded against the buyer or seller for an unpaid court award or unpaid taxes. These recorded matters are listed numerically as exceptions in the preliminary report. They will remain exceptions from title insurance coverage unless eliminated or released prior to the transfer of title. What should I look for when reading my Preliminary Report? The report will note a statement of vesting the degree, quantity, nature and extent of the owners interest in the property. The most common form of interest is fee simple or fee which is the highest type of interest an owner can have in land. Liens, restrictions and interests of others which are being excluded from coverage will be listed numerically as exceptions in the preliminary report. These may be claims by creditors who have liens or liens for payment of taxes or assessments. There may also be recorded restrictions which have been placed in a prior deed or contained in what are termed CC&Rs-covenants, conditions and restrictions. Finally, interest of third parties are not uncommon and may include easements given by a prior owner which limit your use of the property. When you buy property you may not wish to have these claims or restrictions on your property. Instead, you may want to clear the unwanted items prior to purchase. In addition to the limitations noted above, a printed list of standard exceptions and exclusions listing items not covered by your title insurance policy may be attached as an exhibit item to your report. Unlike the numbered exclusions, which are specific to the property you are buying, these are standard exceptions and exclusions appearing in title insurance policies. The review of this section is important, as it is sets forth matters which may not be covered under your title insurance policy, but which you may wish to investigate, such as governmental laws or regulations governing building and zoning. Will the Preliminary Report disclose the complete condition of the title to a property? Is a Preliminary Report the same thing as title insurance? How do I go about clearing unwanted liens and encumbrances? |
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