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What to Look for on a Preliminary Title Report

A preliminary title report is obtained for every purchase transaction. It is prepared by the title company and shows the ownership of a specific parcel of land and any liens, judgments and encumbrances. We usually say title is "clean" if there are no red flags or issues found on the report. It's important to read the title report and ask questions if you don't understand. Getting ahead of any potential issues will help your transaction run more smoothly.

Here are some things to look for when reviewing the document:

  • An outstanding deed of trust: In this case, the deed has been paid off but was not reconveyed. This error has to be fixed in order to clear title.

  • Make sure owner of record matches the owner signing a contract. You don't want to get to close of escrow and find that you've been negotiating with the wrong person.

  • Delinquent Taxes & Assessments will need to be paid off before close of escrow

  • Civil or criminal Actions: A civil action affecting real property will generally have to be dismissed or settled before title to the land can be insure. Divorces and probates are some examples.

  • Incomplete or inaccurate legal descriptions: Always compare legal description on title to the legal description in the purchase and sale agreement. This ensures all property being conveyed has been included and thereby covered in the preliminary title commitment and forthcoming title policy.

  • Look for deed restrictions. They can restrict what you can do with and on your property. HOA may have deed restrictions and cities may impose restrictions on low income housing, water rights etc..

These are just a few of the red flags you'll need to look for when buying a home. Make sure to thoroughly read the document and consult a professional if you have any questions. Do your due diligence!


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