The Escrow Hub Blog

When you purchase a piece of real estate, one of the documents you’ll need is a preliminary title report. But what exactly is this, and why is it so critical to a sale?

To learn more about preliminary title reports and which escrow services in Los Angeles you may require, get in touch with the resident escrow experts at Escrow Hub.

What Is a Preliminary Title Report?

A preliminary title report is a document that contains information about the property’s ownership information. It’s drawn up by an attorney or title company to determine whether the property is subject to any legal claims from parties other than the seller. This can happen in certain situations, for example, if divorced spouses are both still listed as owners of a home and one tries to sell it without the other’s permission. This could impact the sale — or if the sale were to go forward, the spouse who did not give permission could contest it after the transaction is completed. In other words, the preliminary title report shows you whether you can move forward with confidence.

What to Look for in a Preliminary Title Report

Clearly, knowing which private or public parties have any rights to the property is critical to successfully completing a transaction. So, what exactly should you look for on a title report?

  • Liens: A lien or encumbrance is a legal claim by another party to the ownership of a property. According to Zillow, property taxes are always the primary encumbrance shown on a title report. Mortgage liens — which represent the amount of debt still owed on the home — are the most frequently listed encumbrance. However, it’s important to note that any party can file a lien in the event the seller owes them a debt.
  • Easements: An easement is a grant by the property owner to someone else to use his or her property for a specific purpose. For example, a homeowner with a large amount of land may grant a utility company an easement to install utility poles. It’s important to be aware about easements, since they can impact what you can do with a property.
  • Restrictions: In some cases, historic oversight or planning requirements restrict what you can do with a property. For example, a home in a historic district might be subject to strict renovation requirements that prevent any alteration of its exterior.
  • Encroachments: Sometimes, structures or fences from a neighboring property encroach on the land that’s being sold. It’s important to be aware of this before you pay full price for a property that otherwise effectively wouldn’t be delivered in full.

How to Proceed if There Are Issues with the Title

As Redfin points out, in the event there are any issues with the title, it’s advisable to work with your real estate agent, the title company that created the report and the seller to determine how to proceed. In truth, it’s incumbent on the seller to clear up any issues that may stand in the way of a sale. However, you may find that the issues can’t be resolved to your satisfaction — in which case you should talk to your agent or attorney about invoking your title contingency so you can revoke your offer.

Documentation & Escrow Services in Los Angeles

If you’re looking for assistance collecting all of the necessary documents and assets for your property transaction or simply looking for other escrow services in Los Angeles, contact Escrow Hub today.