Reviewing The Preliminary Title Report For Your Home Sale

What is the Title Report?

A title report is a document that outlines the legal status of a property and related information on its ownership.

Key components in a title report include paperwork on the chain of ownership, unreleased or open mortgages, liens or judgment dockets against prior or current owners, and information on the county, zoning laws, property value, and current tax information.

It has a lot of legal jargon and it’s hard to understand sometimes but with an experienced, trusted Realtor and title company by your side you’ll be in good hands. So whether you’re buying or selling your home get ready to try and read that title report.

 

The title report can lead to major disruptions if you find liens on a property or on a person who holds a property or other judgements. For example I had a transaction where the client moved into a home, and 3 months later she got a check at her doorstep for $25,000. Her neighborhood community sued the developer 25 years ago and finally had a judgement sent out to the owners of each property. The reason for this judgement was because the irrigation lines where not installed correctly and some properties had to replace some pipes. This came back to bite us because my client didn’t make any improvements or had any work done to the irrigation pipes since she didn’t notice any damages. When we sold her home the buyers agent did a great job and noticed there was a judgement paid to my seller. The buyers then asked for $5000.00 in credit because the home inspector noted some issues with leaking irrigation lines.

So information can be powerful and you can use it for negotiations, which is a major role in a real estate transaction. Protect your clients and get them the best deal possible by always knowing what’s is on your title report. 

What You Should Look for in the Title Report

ALTA Title Insurance – This is the Homeowners Title Policy (not to be confused with homeowners insurance) that typically goes with the home as part of your title insurance. The title report will have a detailed page stating how much they are insuring the value of your home from a title perspective.

Liens – Is there something on the report that should not be there. For instance does an old contractor have an unresolved lien on the home for work completed to the property?

Easements – An easements means that someone has access to your property for a certain type of usage. A common easement we see often in the city is a shared driveway, where the neighbor has easement rights to use your home’s property to access their garage. Other common easements are for the public utilities to bring power to your home. They have the right to inspect that power and put a meter on your home for the electricity.

Encroachments – Typically this means the neighbors fence or shed might be partially on your property. Often this has no impact on your enjoyment of the property and is minor. If it is major, some title companies might want to insure around this encroachment.

CC&Rs – More typical in a Townhome or a Condo. Or if you are out in the suburbs, the CC&Rs are the rules and regulations for a HOA community. They tell you what you can and cannot do to the property or house. 

Joint Maintenance Agreements – Also mostly found on townhouse. A good townhome community will have a ton of rules about how to maintain the building. Some examples would be what you can do and not do to the shared walls. As a homeowner you can work with the other owners to beef up these rules if the community you are buying into has pretty light rules.

Judgements – Does the seller owe a bunch of money as a result of a court case? That has to be paid BEFORE or as part of the sale before the home can transfer to you as the buyer. This is usually flagged right up front since this may impact the sellers ability to close on the sale of the home.

Name Searches – The Title and Escrow company research names to make sure everyone listed are the REAL buyers and sellers for the property.

What is title insurance?
Title insurance guarantees that the title to real property is free from all defects in title that may exist in the public records for that property. Possible title defects include:

  1. Errors or omissions in deeds
  2. Mistakes in examining records
  3. Forgery
  4. Undisclosed heirs
  5. Missing heirs
  6. Liens for unpaid taxes
  7. Liens by contractors

Where do I get a preliminary Title Report?

To get a preliminary title report, any of the big four title companies (Fidelity, First American, Stewart & Old Republic) can run a title report for you, they typically charge a few hundred dollars. 

You can also get one for free, or deferred payment only if the home sells at close of escrow, by choosing a title company in advance to be the title insurer and opening escrow with them.

Or reach out to me today and we can start working with our preferred Title company 

today! 

Thanks!

-AJ

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