How to Read a title report
Your PRELIMINARY TITLE REPORT is a report that lists the results of a title search by the title company prior to issuing a title binder or commitment to insure clear title.
You have 5 business days to review this report and make any objections. If anything in the report makes you want to walk away from the sale, you may do so with your earnest money in hand if you do it within the 5 business days. The beginning of the title report identifies the property being transferred and the parties to the transaction. It also shows the escrow and title related fees associated with this transfer.
This is the legal description which defines the exact boundaries of the property. If you have any concerns about the location of the true boundaries or if the true boundaries are very important to you, then let us know and we can point you in the right direction for further investigation. Only a boundary survey can tell you exactly where the property lines are, you cannot rely on fences, shrubs, owner’s description, etc. Boundary surveys are not included in home inspections.
STANDARD/GENERAL EXCEPTIONS :
This section of the report contains general exceptions to your title insurance coverage, ie things that the title insurance does NOT insure against. General exceptions are things such as taxes, easements, liens, or claims that are not part of the property record, or encroachments of adjoining properties as discussed above. General exceptions are the same for all properties.
Special exceptions are those that pertain to this particular property, so those are the ones to which you should pay special attention. Any liens are usually items that must be “removed” or resolved before closing.
Typical special exceptions are:
- Property taxes which are unpaid and will be paid through closing.
- The owner’s mortgages which will be paid off at closing.
- Documents associated with CC&R's (Conditions, Covenants & Restrictions) and/or the HOA (Homeowners Association). A careful review of any such documents is important to make sure that they do not affect your intended use for the property. In some cases, legal advice may be required or encouraged.
- The preliminary title report also shows the results of a judgment search against the buyer to ensure that there is nothing preventing them from taking title as intended.