None of the items deemed important to real estate investors and home buyers during a transaction may carry more weight than the title report. The title report is specifically designed to disclose the most important information about a property, including everything from the rightful owner and vested interests in the property to the details of liens, encroachments, or easements. It is safe to say that the information contained in a property’s title report is important to understand and necessary. In this post, we will define a preliminary title report and explain how to order a property title report.
After all, a title report is a best and most efficient way to ensure that a property is free of defects. According to Rocket Lawyer, defects are “anything attached to the land, such as another person’s rights, that could affect how you use the land or decrease its value.” The last thing you should be concerned about when purchasing a home is whether or not you are the legal owner. That being said, do yourself a favor and obtain a title report before closing on a property transaction; it could be the best decision you ever make.
What Is A Title Report?
A title report is a document that outlines the legal status of a property as well as related ownership information. A title report must include several key components. This includes county information, zoning laws, property value, and current tax information.
A title report will also include a comprehensive legal description of the property. A sample title report will typically include documentation on the chain of ownership, unreleased or open mortgages, judgment dockets against prior or current owners, and supplemental information within the scope of the search.
What Should You Look For in a Title Report
Title reports are useful because they can assist you in identifying any issues that may affect the transfer of ownership. Here are some examples of common title issues:
Errors in public records:
Check the deed thoroughly because clerical or filing errors can occur. Administrative mistakes can jeopardize the deed’s validity.
Liens on real estate:
An outstanding lien indicates that the property could be used as collateral for the previous owner’s outstanding debt. Learn how a warranty deed can help you protect yourself in this situation.
An encumbrance does not prevent property owners from being transferred, but it does indicate that a third party has an interest or liability in the property. This can reduce the property’s value.
Some people, believe it or not, will go to great lengths to falsify documents. This means that some public records may contain falsified documents, making it difficult to determine who owns a property.
An unknown heir or will, can be discovered in some cases. A previously unknown estate plan can jeopardize future property ownership.
Property boundaries on public survey plans may differ from what was promised. This could lead to disagreements over property lines and value.
Legal claims to a property may be jeopardized if the true property owner is impersonated to sell the home.
Building codes were broken:
Unresolved building code violations can sometimes have an impact on titles.
Preliminary Title Report
A preliminary title report is a report that documents current ownership and matters that the title company may exclude from coverage if a title insurance policy is later issued. It will include any issues discovered with the home title, title issues that are not covered by the title insurance policy (liens and encumbrances), and any actions required by the seller or owner to correct title issues.
Why Are Preliminary Title Reports Important?
A preliminary title report is frequently included in a seller’s disclosure packet. It informs you and the buyer of the following:
- That you are the legal owner of the property
- If there are other people (from banks to construction crews) who have liens on your property that must be cleared before the property is transferred.
- If you owe taxes
Anything to do with title contains a lot of real estates and legal jargon. But don’t be alarmed; it’s just about confirming ownership of the property and ensuring that the buyer is covered if there are any competing claims to ownership later on. Title companies prepare preliminary title reports for sellers, often for free or on a deferred payment report until and unless the home sells.
Why Do You Need A Preliminary Title Report?
A preliminary title report will confirm who owns the property, thereby confirming to prospective buyers that you own the property. It will also inform you of the major issues that must be addressed to sell the property. For example, if there are unpaid liens or property taxes. It’s also standard practice in many areas to include it with your disclosures, so including it simply meets the buyer’s expectations.
Who is in Charge of the Preliminary Title Report?
A preliminary title report is usually provided by the listing agent. “An attorney or title company will review the home’s title to look for any problems that might prevent the home from being legally sold,” according to Redfin. As a result, their findings are documented in the form of a preliminary title report and distributed to the prospective buyer.
Title reports, as the name implies, are the official documentation of a home’s ownership history. A title report, in other words, is a fancy way of identifying a home’s previous owners. A comprehensive report will include information such as liens, encroachments, and easements, to name a few.
Buyers typically receive a preliminary title report within a few days of reaching an agreement with the seller to purchase the property.
How Can You Get A Preliminary Title Report?
Any of the big four title companies (Fidelity, First American, Stewart, and the Old Republic) can run a preliminary title report for you for a few hundred dollars.
You can also get one for free or with a deferred payment if the home sells before the end of escrow by selecting a title company ahead of time to be the title insurer and opening escrow with them. To do so, locate a local office of one of the companies listed above and contact the salesperson via phone or email.
The Three Schedules
Schedule A, Schedule B, and Schedule C are the three sections of a title report. Each section contains unique information. Before reviewing an official report, it can be beneficial to understand what you’re looking for. Schedule A, which is usually the first section of the report, contains information about the current owners and the type of land interest. The scope of the title search and title insurance will also be outlined at the start of the document.
Moving on to Schedule B, the following section will detail any claims, liens, or interests in the property that are not owned by the owners. These features, known as encumbrances, do not always prevent title transfers but may indicate some ownership rights. For example, mineral rights associated with the property would be discussed here. Schedule B includes any property ownership exceptions, such as HOA bylaws or easements against the property. Schedule C is a straightforward document that includes a legal description of the property. The description will differ depending on the local jurisdiction, but it will generally describe the lot and block.
How to Get Property Title Report
- Using the records you do have, gather information about the property.
- Visit your local courthouse and look through property deeds.
- Make an effort to establish a chain of ownership for the property.
- Contact the County Assessor for assistance in locating the actual title.
- If you still don’t have the records, ask your network for the name of a trustworthy title officer.
- Work with the title officer until you have all of the necessary documents.
You can obtain a title report for the property you intend to purchase on your own. Title reports, on the other hand, are complicated, and those who aren’t fluent in the language offered in each report might as well be reading in another language. Assume you are self-assured in your ability to read a title report. In that case, there are two options for gathering more information on the property in question: visit the property’s local courthouse or County Assessor.
Courthouses have a wealth of information on local properties, including chains of title and deed information. That means that if you know what to look for, you can probably find information about your property a few blocks away. Even better, this type of title search is completely free.
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Aside from the courthouse, the County Assessor may have what you’re looking for — for free. Most states now have additional tools for free property title searches, and it’s likely kept at the County Assessor’s office. Just keep in mind that the information isn’t always up to date, so take what you learn with a grain of salt.
While it is tempting to go the easy route, I do not recommend it unless you are completely confident in your ability to decipher records without error. While visiting your courthouse an Assessor can provide you with valuable information, these methods are only for professionals. For those of you who are unfamiliar with conducting title searches, I recommend hiring a professional.
If you don’t know how to obtain a title report for a property you want to buy, I strongly advise you to hire a title officer. A title officer, as the name implies, is someone who has been professionally trained to identify the flaws in a home — yet again. Defects are differences that could call the true owner of a home into question.
Title officers, also known as title agents, are in charge of determining whether or not a piece of real estate is legitimate and has no issues with its title. Title agents will investigate the status of a property during a real estate transaction to ensure the buyer knows exactly what they are dealing with. In this manner, buyers can commit without fear of future ownership issues.
How to Order A Title Report?
Buyers can use the services of a title company to order a title report. There are numerous reputable title companies ready and willing to conduct a title search on any property. Look in the Yellow Pages for a “title search” or do a similar search online. In any case, finding a reputable company willing to investigate a property’s title should be relatively simple.
If you prefer not to hire a company and instead conduct your title search, go to your County Assessor’s office or courthouse. These sites contain a wealth of information about the property. In some cases, the courthouse’s records may be incomplete. As previously stated, conducting your own title search can have far-reaching consequences. I recommend delegating this task to a professional.
Whether you are a first-time homebuyer or an experienced investor, knowing what you are getting into is critical when purchasing a property. That is why a title report is so important: it details everything you need to know about owning the property. Always exercise caution during the closing process and request a title report. Additionally, go over the above questions to ensure you know what you’re looking for when you get one. By going the extra mile to understand how a title report works, you can help avoid future issues.
Frequently Asked Questions
What Is The Most Important Part Of A Title Report?
The preliminary title report must include three critical sections that must be thoroughly reviewed. The legal description, property taxes, and mortgage liens are among them.
What does title insurance cover?
Once the title is transferred into your name, the title company that holds the policy guarantees its accuracy. This means that the title company is fully responsible for any damage caused by mistakes in the report. However, the scope of that coverage will be determined by the buyer.
How much does title insurance cost?
The cost of a title insurance policy varies by state and is determined by factors such as the lender, the purchase price of the home, and the amount of the down payment.