Information And Advice On Preliminary Title Report

Everything You Need to Know About Preliminary Title Report

Are you planning to buy a new house? You must list down a few essential factors in your checklist. Make sure you include a preliminary report on the top! When you sell or purchase a home, ask your real estate agent if the title report is clear. It denotes who holds the rightful ownership of the property and gives the authority to sell it.

While it may appear straightforward that a home seller possesses ownership of their house, there could be undisclosed claims or liens on the property. Whether you buy a house in Texas or California, never assume the documents will be clear. 

Some homeowners are not aware of these glitches and face issues later. This underscores the importance of a preliminary report and title search for buyers and sellers. We will briefly summarize everything you should know about conducting a property title search in real property.

What Is A Preliminary Title Report

There is no such standard preliminary title report definition. A preliminary title report simply furnishes comprehensive details concerning the title and background of a property. Its purpose is to confirm that the seller legally owns the home you intend to purchase. 

Plus, it assures that no unknown heirs can claim the house. The report cites any encumbrances associated with the real estate, such as property tax laws in Texas, mortgages, and easements. If the seller fails to address these encumbrances, then it can affect the potential ownership and create conflicts post-purchase.

The title company will generate the report before issuing the title insurance policy. They thoroughly check the public records and official documents. If they find any issues reported in the document, the buyer, lender, and seller bear responsibility for any losses from these exclusions.

Preliminary Title Report Vs. Title Report

A Preliminary Title Report and a Title Report serve similar purposes in real estate transactions. However, they have differences in timing and depth of information:

A preliminary report is typically generated early in the escrow process, shortly after the opening of escrow. It provides a snapshot of the property’s title history and current condition. The preliminary report is not a final commitment to ensure the title. 

However, it outlines the conditions under which a title insurance policy may be issued upon closing. It alerts the buyer and lender to any existing liens, encumbrances, or property title restrictions. 

The preliminary report allows parties to address any issues that may affect the transfer of title before the final transaction.

So, what is a title report? Some people also refer to it as the Title Insurance Policy. This report is issued after the close of escrow. The report provides a comprehensive overview of the property’s title history and confirms the buyer’s ownership rights. 

The title insurance policy protects you (the buyer) and the lender against unforeseen defects, liens, or encumbrances not discovered during the initial title search. Unlike the preliminary report, the title report is a final commitment from the title company to insure the property’s title.

How To Get A Title Report For A Property

Use these mentioned steps to obtain a title report for a property:

  • Contact a Title Company: Contact a reputable title company near your property. Title companies specialize in conducting title searches and preparing preliminary reports of real estate.
  • Provide Property Information: Give the title company all the necessary information about the property. Ensure you include the property address, legal description, and other relevant details.
  • Request a Title Search: Request a title search for the property. The title company will comprehensively search public records to uncover any liens, encumbrances, or ownership issues associated with the property.
  • Review the Title Report: Once they complete the title search, the company will prepare a report detailing its findings. Review the report carefully to understand the property’s title history and potential ownership issues.
  • Address Any Concerns: If the title report reveals any issues or discrepancies, work with the title company to address them. This may involve resolving outstanding liens, clearing up ownership disputes, or obtaining title insurance to protect against unforeseen claims.

Who Is Responsible For Ordering The Preliminary Title Report?

Lenders often request preliminary title reports and title insurance coverage as part of their requirements. It’s customary for the seller to initiate the process with a title company once escrow is opened in a typical real estate transaction. 

The seller then includes the preliminary title report in their disclosure packet, which contains essential documents for the buyer and lender.

Usually, the seller covers the cost of the prospective owner’s policy once all details are finalized. This practice may vary depending on the customs of the local real estate market. However, the buyer is typically responsible for the lender’s title insurance expenses.

What A Preliminary Report Shows?

Now that you have understood the procedure let us dig into more details. You might have questions like “What does the title report look like?” or “Where can I get a preliminary title report?” 

You may see tons of things about what the report shows, but your primary concern lies in understanding the extent of your ownership rights. So, when reviewing a title report, you need to examine the ownership interest in the property along with its description, claims, restrictions, or interests held by others.

The report typically includes a statement of vesting outlining the degree, nature, quantity, and extent of the owner’s interest in the real estate. The most common form of interest is “fee simple” or “fee,” representing the highest interest an owner can have in land.

You can see Liens, restrictions, and interests of others excluded from coverage. These will be listed numerically as “exceptions” in the preliminary report. 

These may encompass creditor claims with liens, tax liens, recorded restrictions from prior deeds, or CC&Rs (covenants, conditions, and restrictions). You will also find third-party interests, like easements limiting property use. As a buyer, you might prefer to clear these unwanted items before purchasing.

Another important factor is a printed list of standard exceptions and exclusions. Unlike the numbered exclusions specific to your property, these standard exceptions and exclusions are common in title insurance policies. You need to review this section carefully, as it delineates matters excluded from coverage under your policy. 

Information and Advice on Preliminary Title Report

What A Preliminary Report Doesn’t Show

A Preliminary Report may not reveal specific critical details. Here’s what it typically doesn’t show:

  • Unrecorded Liens and Encumbrances: The report may not uncover unrecorded liens or encumbrances on the property, which could surface later and affect your ownership.
  • Boundary Disputes: It may not disclose potential boundary disputes or issues with neighboring properties, which could lead to conflicts in the future.
  • Easements Not Recorded: Some easements, particularly those not officially recorded, may not be evident in the report. These could impact your use of the property or access rights.
  • Future Zoning Changes: The report may not predict future zoning changes or other regulatory shifts that could affect the property’s use or value over time.
  • Pending Lawsuits or Claims: The report may not indicate pending lawsuits or claims against the property that could affect your ownership rights or lead to financial liabilities.

The Importance Of Preliminary Reports

There is no doubt that these reports help buyers in several ways. By obtaining a preliminary report, buyers can understand the critical risks and liabilities involved with the property, empowering them to make informed decisions before finalizing the purchase. 

Preliminary title reports offer an immediate means of identifying title defects. It saves buyers and lenders valuable time typically spent on background checks. Moreover, they help sellers avoid potential lawsuits by revealing existing encumbrances to buyers. 

Title Insurance Coverage

Title insurance serves as indemnity insurance, shielding both lenders and homebuyers from financial losses resulting from defects in a property’s title. 

Based on the information provided in the preliminary title report, the title insurance company assesses the risks associated with the property’s title. 

Title insurance coverage is then issued to protect the buyer and lender against any future defects, errors, or issues that may arise with the title. The findings inform the coverage offered by the title insurance policy of the preliminary title report.

Do You Need A Preliminary Title Report?

Absolutely yes! Obtaining a preliminary title report is the first thing you need to do in any real estate transaction. A preliminary title report provides essential information about the property’s title, including ownership history, liens, encumbrances, easements, and other potential issues. 

The preliminary report serves as a valuable tool for buyers and sellers to assess the status of the property’s title. It helps you identify any severe risks or concerns before finalizing the transaction. 

Reviewing the preliminary title report lets you make informed decisions about the property’s purchase. It can also help sellers to address any issues upfront and ensure a smooth closing process. It’s better if you get help from the experts to carry out this process.

Unlock the Door to Your Dream Home with Confidence

Navigating the complexities of buying a home can be daunting, especially when considering Texas living costs and the specifics of locales like Houston or Haltom City. Armed with the insights from a Preliminary Title Report, you’re stepping forward with the knowledge needed to secure your investment. 

Whether you’re among the eager Houston home buyers or planning to sell your house in Haltom City, understanding the title’s clearness ensures a smoother transaction and peace of mind. 

Ready to make your next big move with confidence? Let Four 19 Properties guide you through every step, ensuring you’re well-informed and ready to claim your slice of Texas living.

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