Why Is the Preliminary Title Report So Important When Buying?

When you start the process of buying a home and enter escrow,
it's important to be aware of the preliminary title report and
its contents. Here's why.





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When you buy a home and you're in the escrow process, the
preliminary title report has three key aspects to it. Dozens of
records come into the play about the home you're thinking of
buying, and it all has to be disclosed to you as the buyer.
The title report is one is one the most important
reports in this process because it documents the ownership
of the home as well as any liens, easements, or encroachments
against the property. A title company compiles all this
information and puts into a report that goes to you and your
agent. The information in this report is critically important,
and you should be aware of the three most important
aspects:
The status of the property: Property taxes always show
up on the preliminary title report and show how much is owed
and how much has been paid. As a buyer in escrow, the important
part is making sure any property taxes have been paid before
closing escrow; it's actually a condition of closing escrow. If
by chance the seller hasn't paid property tax, it will be paid
out of the proceeds they'd receive from the sale. Property tax
is a top lien item on any preliminary title report. The
legal description: You won't see this is any of the agent's
marketing information. It's a written description of the
property's location and boundaries relative to nearby streets
and intersections. Mortgage liens: These are generally
listed right below property taxes and are listed in order. If a
home has two loans on it, the mortgagor in the first position
would be noted first and the mortgagor in the second position
would be noted second. In all property transfers in escrow
between a buyer and seller, the mortgage liens must be paid off
prior to the title transfer. When the sales close, the liens
must be paid off in the order that they appear on the title
report. The seller is left with the net proceeds based on that.


Understanding the preliminary title report is a crucial
aspect of buying a home.

Now, this list isn't all-inclusive and there are a
variety of other items that could show up on a title report.
That why it's so important to understand what's included in
that preliminary title report when you're in escrow as a
homebuyer. You also want to be clear on what title insurance
protects you from. If you have any questions about this step in
the home buying process or you're thinking of selling property
in the area, give us a call or send us an email soon. We're
here to help.