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Preliminary Title Report


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A preliminary report will be requested by the escrow officer and searched through a title company. The preliminary report, which is more commonly referred to as the “prelim”, includes the name of all property owners, property address, and liens attached to the property, including mortgage, personal, or tax-based leans. The preliminary report is typically prepared prior to the issuance of title insurance, so that title insurers, buyers, and lenders are aware of what liens are attached to a property.

The purpose of the prelim report is to disclose all aspects of the property of which the buyer should be aware. While most transactions are straightforward and many not actually require a prelim, prelims are given to verify that a property is in good standing and exists to clearly communicate to the buyer what he or she is investing in. Real estate agents will often also help facilitate the process of obtaining the title report and any other reports which the client may request.

A preliminary report is a report put together by the title company that highlights all the ownership claims associated to a parcel of land. The preliminary report will list all liens and encumbrances that are recorded. Before closing of the transaction, the title insurance company will give the preliminary report to the property purchaser.

The preliminary report will:

Indicate the legal description of the property and name all the owners whom are recorded.

List all lien holders, including the government for unpaid taxes.

Items  title insurance does not cover.

Describe any conditions or restrictions.

Role of Preliminary Report in the Real Estate Transaction

The preliminary report will list all the conditions in which the title company will not cover. It helps potential buyers understand the ownership dynamics of the property, including being apprised of all public liens. By being aware of all the liens associated with the purchase of the property, the home buyer can make an informed decision whether to move forward with a transaction. If the buyer discovers any liens that will prevent him or her from fully owning the property without any liens from the previous owner, the buyer can contact the lien holders and work towards an agreement to get everything written off.

Guarantee of title is the warranty that title is clean as indicated through public records. The guarantee of title acts as a guarantee from the seller to the buyer that no additional parties hold an interest or a lien on the property upon the sale of the property. This is done to protect the interests of the buyer in guaranteeing that the buyer is the only party with possession of the property.

A title plant is a chain of title and collection of date listed the ownership and lien history of a property address, rather than by the name of a property owner.

Every title insurer is required to save a portion of its premiums, typically at least 10%, to create a fund that is equal in the amount to 25% of the aggregate capital stock of the insurer, or one million dollars, whichever is the lower amount. After the establishment by a title insurer of an unearned premium reserve, such an amount shall be reduced by the aggregate amount which shall be set aside and kept by the insurer in such unearned premium reserve. This fund is known as the title insurance surplus fund. The title insurance surplus fund must be kept as a further security to holders and beneficiaries of the title policies issued by the insurer. If all or any part of the fund shall at any time be more than the amount required by Section 12370, such excess may be transferred by the insurer to its general assets.

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