When buying real estate you will be present with many documents that look unfamiliar to you. Your agent should be able to explain each one to you and why it matter. Here is an outline of what the Preliminary Title Report Contains and the things you should look for in this document.
Vesting– Make sure the names on the Preliminary Title Report are the correct names and that the property is the same as the property on the purchase contract.
Taxes and Assessments- In addition to looking for special tax districts you might not have been told about you can look for an exemption or classification designation that would change the tax amount as a result of the sale. It is common, in California, for properties to be reassessed upon sale.
Deed of Trust – To make sure all debts on the property are being paid off in your transaction be sure all paid off Deeds of Trusts are reconveyed. Upon proof of payment and/or an indemnity, the title company may insure around the encumbrance.
Identity Matters – As a buyer you will provide a ‘Statement of Information’ which can clear up identity issues that may arise. The seller will have to do one as well. If there are judgments and liens that belong to the party in question and have been paid then a release or satisfaction must be obtained and recorded or filed to eliminate the matter.
Pending Actions – A civil action affecting real property generally will have to be dismissed before title can insure. A divorce or probate doesn’t have to be finalized but special requirements may exist. Check with your Title Rep. or Title Officer for more information.
Joint Use Matters – Driveways, common walls and most easements may prompt Lenders to require a joint maintenance agreement. The preliminary title report will show such agreements if one is on record.
Extended Coverage Matters – If a physical inspection of the subject property disclosesencroachments, lien rights, or other matters, these must be addressed before the lender will close. An extended coverage owner’s policy may be requested and a survey of the property will be required. Although this type of situation would delay your closing it is imperative that you get it done before you let the proeprty transfer.
Legal Description - The legal description should always be compared to the legal descriptionin the purchase and sale agreement to be sure that all the property being conveyed has been included in the preliminary title report. I see this most commonly when there has been additional acreage added to the property or multiple buildings exist. In anycase be sure that all property is included in the legal description.
While basic the above gives you a great start on understanding why this document is important and what you need to do with the information contained in it.
