The preliminary title report, explained

Early in escrow, a document called the preliminary title report lands in your inbox. It looks dry. It is one of the more useful papers you’ll read during a purchase. So let me walk through what it is, what it tells you, and why I read every one of them carefully.

A preliminary title report, often called the prelim, is the title company’s summary of who legally owns the property and what is recorded against it. The title company researches public records and reports back. Think of it as the property’s recorded history, written down in one place.

What the prelim shows

The prelim lists the things that are attached to the property in public records. The common items are:

• Liens. Money claims recorded against the property. A mortgage is a lien. So are unpaid property taxes, and in some cases a contractor’s claim for unpaid work. Most liens get paid off and cleared at closing.
• Easements. A recorded right for someone else to use part of the land. A utility company may have an easement to access a power line. A neighbor may have a shared driveway. Easements are common and usually no cause for concern. You just want to know they exist.
• Recorded restrictions and CC&Rs. Rules recorded against the property that limit what can be done with it. In a condo or planned community, the CC&Rs (Covenants, Conditions, and Restrictions) are the rulebook for the whole development. We read those closely.
• The vesting. How the current owner holds title, and confirmation they have the right to sell.

Why you read it, and what to flag

You read the prelim to confirm the seller can deliver clean title and to see anything that travels with the property after you own it. Liens generally get cleared at closing, so they are mostly the title company’s job to resolve. The items I pay closest attention to are the ones that stay with the property: easements and recorded restrictions.

Here is what I flag for a client:

• An easement that runs through a spot where you’d want to build, park, or expand.
• A restriction that conflicts with how you plan to use the home.
• Anything in the report that doesn’t match what we were told about the property.
• A lien or claim the title company has not yet confirmed will clear at closing.

Most prelims are clean and unremarkable. When something does stand out, we have time to ask about it. In California, the buyer’s review of the preliminary title report sits inside the contingency period, the window when you can investigate the property and back out if something doesn’t work. We use that window on purpose.

If you want the broader picture of how the prelim fits alongside the other reports you’ll receive, my piece on what a clean disclosure package actually looks like lays that out.

How title insurance fits

The prelim sets the stage for title insurance, and the two go together. Title insurance protects you against problems in the property’s recorded history that nobody caught: a forged signature in an old deed, a missed heir with a claim, a recording error from years ago. The policy covers the risk that something in the chain of ownership turns out to be wrong after you close.

A few plain points about it:

• The prelim describes what is known. Title insurance covers certain risks the prelim could not surface.
• An owner’s policy protects you. A lender’s policy protects the lender. In most California purchases you’ll see both. Who pays for which is a local custom and a negotiated term.
• The policy lists exceptions, meaning items it does not cover. Many of those exceptions are the easements and restrictions already named in the prelim. That’s another reason to read the prelim: it tells you what the insurance is leaving out.

You do not need to memorize any of this. You need to know it exists and that it is working in your favor.

The short version

The preliminary title report is the property’s recorded history in one document: liens, easements, restrictions, and confirmation the seller can sell. You read it to catch anything that travels with the home after closing. Title insurance backs you up against hidden problems in that history. We review the prelim together inside your contingency window, where there’s room to ask questions calmly.

If a line on your prelim looks confusing, send it my way and we’ll go through it together. That’s exactly the kind of thing I’m here for.