By Living Room Realty, July 1, 2024
It is a document that provides a snapshot of the current state of the title of the property. It is typically prepared by a title company or an attorney during the due diligence phase of a real estate transaction
Key Components of a Preliminary Title Report:
Property Information: This section includes details such as the property’s address, legal description, assessor’s parcel number (APN), and the county where the property is located
Current Owner: Identifies the current owner of the property
Encumbrances: Any claims, liens or interests that affect the property’s title. These can include mortgages, deeds of trust, easements or any other restrictions on the property
Outstanding Issues: The report may highlight any unresolved title issues or discrepancies that need to be addressed before the property can be sold or transferred. These issues could include unresolved liens, boundary disputes or other legal matters.
Why is it important?
The preliminary title report is a critical document for several reasons:
Title Clarity: It helps determine whether the property has a clear and marketable title, which is essential for a smooth real estate transaction
Risk Assessment: It allows buyers and lenders to assess the level of risk associated with the property’s title. Any encumbrances or issues identified in the report can be addressed before closing the deal
Legal Compliance: It ensures that the property complies with all legal requirements and restrictions; such as zoning regulations and CC&Rs (Covenants, Conditions and Restrictions)
Negotiation Tool: The report can serve as a negotiation tool during the transaction. If there are significant title issues, parties can renegotiate the terms of the deal or request that the seller takes corrective action
Next Steps:
After receiving the Preliminary Title Report, it’s essential to review it carefully and consult with a qualified title professional or real estate attorney if you have any questions or concerns. THey can guide you through the process of addressing any issues and ensuring a clean and marketable title. You will have 5 business days to review this report and revoke.
I hope this information is helpful and explains the importance of the Preliminary Title Report in your real estate transaction.
