When you’re buying or selling a home, one of the most important documents in the process is the preliminary title report—often called the “prelim.” It’s a crucial step in ensuring that the property you’re buying has a clear title and no hidden surprises waiting down the road.
What Is a Preliminary Title Report?
A preliminary title report is a document prepared by a title company that outlines the current ownership of a property and lists any liens, easements, encumbrances, or legal issues tied to it. Think of it as a snapshot of the property’s legal standing. It’s not the final title insurance policy, but rather the preview of what that policy will cover once the transaction closes.
This report is usually ordered early in the escrow process—right after a buyer’s offer is accepted. Both the buyer and seller receive copies, and it becomes an essential tool for making sure the title is clean and ready to transfer.
What’s Included in a Preliminary Title Report?
The report typically contains:
- Property ownership details: Confirms the legal owner(s) of the home.
- Legal description: Details about the property’s boundaries and lot number.
- Liens and loans: Lists any outstanding mortgages, unpaid taxes, or contractor liens.
- Easements: Notes if others (like utility companies or neighbors) have rights to use part of the property.
- Restrictions or covenants: Outlines any rules that govern the property’s use (common in HOA communities).
What Should You Do with It?
Once you receive the preliminary title report, review it carefully. Here’s how to approach it:
- Check ownership details: Make sure the seller listed on the report matches the one in your purchase contract.
- Review liens or debts: Ensure all existing loans or liens will be cleared before closing.
- Note easements and restrictions: Be aware of any third-party rights or limitations that could affect your use of the property.
- Ask questions: If something looks unclear, talk to your real estate agent or title officer. They can explain what each item means and whether it’s standard or concerning.
- Resolve issues early: If the title shows any problems (like a past lien that hasn’t been released), work with your agent and title company to address them before closing.
Why It’s Important
A preliminary title report protects you from future headaches. It ensures that once you take ownership, you won’t suddenly discover another party claiming rights to your home or unpaid debts attached to it. By reviewing the report early, you can close the deal with confidence knowing that your investment is secure.
The preliminary title report may not be the most exciting part of buying a home, but it’s one of the most important. Understanding it—and addressing any issues it reveals—is key to ensuring a smooth, safe, and successful closing.
If you’re considering a move or investment and require a trusted Real Estate Broker, we’re here to assist you. Contact us via email at TEAM@McDanielCallahan.com, complete the form below, or give us a call at 925-838-4300. We are ready to provide expert guidance and support for all your real estate needs. Terry McDaniel DRE License #00941526
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