The Importance of Getting Familiar with the Preliminary Title Report
In the real estate purchasing process, the preliminary title report is king. While it may not be the most exciting document you will ever come across when buying real estate, it is very important to know what this document contains. This report can be obtained by accessing the property records stored in the county where the property sits.
The preliminary title report documents important information about the ownership of a property, but it doesn’t stop there. It also reveals any items that have been recorded against the real estate being purchased. This can include items like liens, easements and encroachments.
Why Is A Preliminary Title Report Required?
The reason that a preliminary title report is so important in the residential home buying process is that it will be the document that determines how a title insurance company will issue their policy. The report reveals the things that need to be addressed before a seller can covey a title that’s both clear and marketable. Addressing these issues will allow for a title insurance policy to be issued.
Must-Review Sections of the Preliminary Title Report
While it’s suggested that property buyers review the entire preliminary title report, there are a few sections that should be given a more thorough once-over.
One of these is the property taxes section. This section contains information regarding the status of property tax payments. If there are outstanding amounts, a transfer of the property will not be able to occur. Outstanding amounts include those owed to all forms of locations a property is located within, whether it is in a county, town or city.
The legal description is another important section of the preliminary title report to review carefully. This section contains information that can’t be seen in the advertising that realtors do. The legal description clearly defines the boundaries of the property, how those boundaries relate to nearby intersections and roadways, the easements that apply and parking, storage and interest in any common areas. This part of the report helps to ensure that both buyer and seller are on the same page when it comes to what is and isn’t included with a property.
Finally, mortgage liens are the next section of the preliminary title report that should be reviewed carefully. Listed in order of first, second and third, the mortgage liens section will detail which liens must be paid, as well as the order in which payment needs to occur. There are a wide variety of items that can appear in the mortgage liens section of a preliminary title report. But some of the more common are historic oversights and restrictions, covenants, conditions, and easements.
Both buyers and their agent should review the preliminary title report as carefully as possible, because addressing any discrepancies in the report can ensure that the title is delivered as efficiently as possible. Reading the report can also help you to spot potential issues before you buy, which can mean avoiding costly purchasing mistakes.
