# What Is a Preliminary Title Report? A Complete Guide for Home Buyers By Heidi Knight | 2022-06-04 > Every buyer should be aware of the preliminary title report, which contains crucial info about a property. ## Key Takeaways A **preliminary title report** is a document prepared by a title company that details the current ownership status, liens, encumbrances, and other recorded matters affecting a piece of real property. If you're buying or selling a home, the prelim report is one of the most important documents you'll encounter during the [closing process](https://www.opendoor.com/articles/closing-on-a-house) — it's essentially a snapshot of everything attached to the property's title before ownership changes hands. Understanding what a preliminary title report shows, how to read one, and what to do if problems surface can mean the difference between a smooth closing and a costly surprise. This guide walks you through every component of a prelim report, explains common title defects and what constitutes a clear title in real estate, breaks down title insurance costs, and gives you a step-by-step action plan if issues arise. Whether you're a first-time homebuyer or selling a property on your own, here's everything you need to know. [Get your offer](#) ## What Is a Preliminary Title Report? A preliminary title report — sometimes called a "prelim" or "preliminary report" in real estate — is a document issued by a title company or title insurer before a real estate transaction closes. It summarizes the condition of the property's title based on a search of public records, including county recorder files, court records, and tax assessor data. ### Who Prepares It? The preliminary title report is prepared by a **title company** or **title insurance underwriter**. In most transactions, the [escrow company](https://www.opendoor.com/articles/what-is-escrow) or the buyer's lender orders the report shortly after a purchase agreement is signed. In some states, the seller's agent orders it as part of the listing process so potential issues can be addressed before offers come in. ### When Is It Issued? The prelim report is typically delivered within **one to two weeks** of opening escrow, though timelines vary by state and title company workload. Buyers usually receive the report during the [home inspection and due diligence period](https://www.opendoor.com/articles/home-inspection-checklist), giving them time to review findings and raise objections before contingency deadlines expire. The prelim is **not** the final title insurance policy. Instead, it's a preliminary commitment — a statement of what the title company has found so far and the conditions under which they're willing to issue a title insurance policy at closing. ## What Does a Preliminary Title Report Include? If you've ever wondered *what does a preliminary title report show*, the answer is: nearly everything recorded against the property in public records. Below is a detailed breakdown of each component you'll typically find. ### Property Legal Description Every prelim report begins with the **legal description** of the property — the formal description used in recorded documents rather than the street address. This usually includes the lot number, block, tract or subdivision name, and a reference to the recorded plat map. For rural or unplatted land, the description may use metes and bounds (directional measurements from a point of origin). Confirm this matches the property you intend to buy; errors here can signal larger recording problems. ### Current Ownership and Vesting This section identifies **who currently holds title** and how ownership is vested — meaning the legal manner in which title is held. Common vesting types include: - **Sole ownership** (one individual) - **Joint tenancy** (two or more people with right of survivorship) - **Tenancy in common** (two or more people without right of survivorship) - **Community property** (spouses in community property states) - **Trust or entity ownership** (held by a living trust, LLC, or corporation) Vesting matters because it determines who must sign the deed to transfer valid ownership. If the seller's name or vesting doesn't match what's expected, it could indicate an unresolved ownership issue. ### Liens and Encumbrances One of the most critical sections, this lists every **financial obligation** recorded against the property. Common liens include: - **Mortgage liens** — existing home loans that must be paid off at closing - **Tax liens** — unpaid federal, state, or local taxes - **Mechanic's liens** — filed by contractors or suppliers for unpaid work - **Judgment liens** — resulting from court judgments against the property owner - **HOA liens** — unpaid [homeowners association](https://www.opendoor.com/articles/what-is-an-hoa) dues All liens must typically be cleared or accounted for before title can transfer cleanly. Your [closing costs](https://www.opendoor.com/articles/closing-costs-for-buyers) may include payoffs for existing liens, so pay close attention here. ### Easements and Rights of Way An **easement** grants someone other than the property owner a right to use part of the land for a specific purpose. Common examples include: - **Utility easements** — allowing power, water, or gas companies access to infrastructure - **Access easements** — granting a neighbor the right to cross the property to reach their own - **Drainage easements** — permitting water runoff management Most easements are standard and pose no problem. However, an easement that runs through the middle of a backyard or restricts where you can build is worth investigating before closing. ### CC&Rs and Deed Restrictions **Covenants, Conditions, and Restrictions (CC&Rs)** are rules recorded against the property — usually by a developer or HOA — that govern how the property can be used. These may include restrictions on building height, exterior paint colors, fencing, or commercial use. The prelim report will reference the recorded CC&R document so you can obtain and review the full text. ### Property Tax Status The report includes the **current property tax assessments** and whether taxes are paid, delinquent, or subject to supplemental assessments. Unpaid property taxes become liens that take priority over almost every other claim. If you're buying a home, make sure your [estimated closing costs](https://www.opendoor.com/articles/closing-costs-for-sellers) account for any prorated tax adjustments. ### Title Exceptions **Title exceptions** are items the title company specifically *excludes* from coverage under the eventual title insurance policy. Standard exceptions often include: - General and special property taxes for the current fiscal year - Easements and encumbrances visible on a survey - Rights of parties in possession (tenants, for example) - Mineral and water rights previously reserved Understanding exceptions matters because these are the situations where your title insurance *won't* protect you. We'll discuss the difference between exceptions and defects below. ### Judgments and Pending Legal Actions The prelim report may reveal **pending lawsuits, bankruptcy filings, or recorded judgments** involving the current or former property owners. These can cloud title and delay or prevent closing. For instance, a [lis pendens](https://www.opendoor.com/articles/what-is-a-lien-on-a-house) — a recorded notice of a pending lawsuit affecting the property — is a serious red flag that must be resolved before transferring ownership. ## How to Read a Preliminary Title Report: A Step-by-Step Guide If you've never seen a prelim report before, the document can feel dense and legalistic. Here's how to approach it section by section. ### Schedule A — Property and Ownership Information **Schedule A** is your starting point. It contains: - The **effective date** of the report (the date through which public records were searched) - The **proposed insured** (typically the buyer and/or lender) - The **property legal description** and address - The **current vesting** (who owns the property now) - The **proposed policy amount** (usually the purchase price) **What to check:** Verify the property description and owner names are correct. Confirm the effective date is recent — a stale report may miss recently recorded documents. ### Schedule B-I — Requirements and Conditions **Schedule B-I** lists the **conditions that must be met** before the title company will issue a policy. These are essentially the title company's "to-do" list. Common requirements include: - Payment of existing mortgage balances - Clearance of outstanding liens or judgments - Recording of a new deed with proper signatures - Payment of delinquent property taxes - Submission of trust documents or entity authorization **What to check:** Every item here represents something that needs to happen before closing. Work with your [real estate agent](https://www.opendoor.com/articles/how-to-find-a-real-estate-agent) and escrow officer to confirm each requirement is being addressed. ### Schedule B-II — Exceptions from Coverage **Schedule B-II** is the list of **title exceptions** — items the title insurance policy will *not* cover. These are the known issues that the title company has identified and is specifically excluding from the policy's protection. **What to check:** Read every exception carefully. Some are boilerplate (standard tax exceptions, general easements), while others are property-specific and could affect how you use the land. If any exception is unacceptable, you can negotiate its removal or ask the title company for an endorsement. ### Red Flags to Watch For While reviewing the prelim report, flag these items for immediate follow-up: - **Name discrepancies** — the seller's name on the report doesn't match the purchase contract - **Unreleased liens** — old mortgages or judgments that were paid off but never formally removed from the record - **Multiple easements** — especially if they overlap or affect buildable areas - **Lis pendens or pending litigation** — active legal disputes involving the property - **Unusual exceptions** — anything beyond standard boilerplate that limits your rights - **Gaps in the chain of title** — missing transfers or unexplained ownership changes When in doubt, ask your agent or a real estate attorney to review the report with you. ## Common Title Defects and What They Mean A **preliminary title report** doesn't just show you the current state of a property's title — it can also reveal **title defects** that need to be resolved before closing. ### What Are Title Defects? Title defects are problems in the ownership record that call into question who legally owns the property or that create encumbrances the seller cannot easily remove. Unlike title exceptions (which are known and disclosed), **title defects** are irregularities that can prevent a property from being sold with what's called **marketable title** — a title that a reasonable buyer would accept without objection. ### Common Types of Title Defects Here are the most frequently encountered title defects in residential real estate: - **Outstanding liens** — unpaid mortgages, tax liens, mechanic's liens, or judgment liens that remain recorded against the property - **Forgery or fraud** — a prior deed or mortgage document bearing a forged signature, rendering the transfer invalid - **Undisclosed heirs** — a prior owner died, and an heir with a legitimate ownership claim was not included in the probate or transfer - **Recording errors** — clerical mistakes in public records, such as misspelled names, incorrect legal descriptions, or improperly notarized documents - **Boundary disputes** — disagreements over property lines, often revealed by a survey that contradicts the legal description - **Missing signatures** — a deed that required multiple signatories (such as a married couple in a community property state) but was signed by only one party - **Illegal deeds** — transfers executed by minors, people of unsound mind, or unauthorized representatives - **Unknown encumbrances** — restrictions or obligations (like unpermitted easements) that surface after the initial title search According to the [American Land Title Association (ALTA)](https://www.alta.org/), approximately 25% of all real estate transactions involve a title issue that must be resolved before closing. ### Title Defects vs. Title Exceptions: What's the Difference? This distinction matters because it directly affects your protection: | | **Title Defects** | **Title Exceptions** | | **Definition** | Problems in the ownership record that need to be fixed | Known items the title insurer excludes from coverage | | **Examples** | Forged deeds, unreleased liens, undisclosed heirs | Utility easements, mineral rights reservations, current-year taxes | | **Impact on closing** | Must be resolved before (or at) closing | Typically accepted as part of the transaction | | **Title insurance coverage** | Covered by title insurance if not discovered before closing | **Not covered** — explicitly excluded from the policy | The prelim report should help you identify both. Work with your agent and title officer to determine which items are standard exceptions and which are actionable defects. ## What Is a Clear Title in Real Estate? When you hear the term **clear title in real estate**, it refers to a property title that is free of liens, disputes, encumbrances, or any legal questions about ownership. A clear title — also called **marketable title** or **good title** — means the seller has the undisputed legal right to transfer ownership, and no third party can make a valid claim against the property. ### Why a Clear Title Matters for Closing Lenders require a clear title before they'll fund a mortgage. If the title isn't clear, the transaction stalls. Here's why it's essential: - **Lender protection** — mortgage companies won't issue a loan on a property with unresolved title issues because their collateral (the property) could be at risk - **Buyer protection** — purchasing a property without a clear title means you could inherit someone else's debts, legal disputes, or ownership claims - **Insurability** — title insurance companies won't issue a policy until all significant defects are resolved, which means the closing can't proceed through normal channels The preliminary title report is the document that reveals whether or not the property has a clear title. If the report comes back with no significant defects or outstanding liens, the title is considered clear and the transaction can move forward. ### How to Resolve Title Issues Before Closing If the prelim report reveals problems, there are several common resolution paths: - **Lien payoffs at closing** — the most common resolution. Existing [mortgage balances](https://www.opendoor.com/articles/what-is-a-mortgage), tax liens, and judgment liens are paid from the seller's proceeds at the closing table. - **Quiet title action** — a court proceeding that establishes clear ownership when there's a dispute or ambiguity in the chain of title. This process can take weeks to months. - **Quitclaim deeds** — a former spouse, heir, or co-owner signs a quitclaim deed releasing any interest in the property. - **Affidavits and corrective documents** — for minor recording errors, the title company may accept a sworn affidavit or a corrective deed to fix the record. - **Boundary surveys** — if there's a boundary dispute or encroachment, a licensed surveyor can establish definitive property lines. - **Negotiated settlement** — in some cases, the buyer and seller agree to a price reduction or credit to account for an issue that can't be fully resolved before closing. ## What to Do If You Find Problems on Your Prelim Report Discovering an issue on your preliminary title report doesn't necessarily mean the deal is dead. Here's a step-by-step approach to handling problems. ### Review with Your Real Estate Agent Your first step should always be to sit down with your [real estate agent](https://www.opendoor.com/articles/how-to-find-a-real-estate-agent) or attorney and go through the report item by item. An experienced agent will know which exceptions are standard and which are genuine concerns. Many items that look alarming to a first-time buyer — like utility easements or CC&R references — are completely routine. ### Request the Seller Resolve Title Issues Most [purchase agreements](https://www.opendoor.com/articles/how-to-make-an-offer-on-a-house) include a title contingency that gives the seller a window to cure any title defects. If the prelim report reveals a lien, judgment, or other defect, you can formally notify the seller and request that they resolve the issue before closing. Common seller obligations include: - Paying off outstanding liens from sale proceeds - Obtaining releases for old, satisfied loans that were never formally cleared - Resolving boundary issues or obtaining necessary easements ### Negotiate or Extend Your Contingency Period If a title issue is complex — like a quiet title action or an heir dispute — it may take longer to resolve than your standard contingency period allows. In these cases, you can: - **Request a contingency extension** from the seller to allow more time for resolution - **Negotiate a price reduction** that accounts for the cost or risk of the defect - **Request a holdback** — a portion of the seller's proceeds is held in escrow until the issue is resolved post-closing ### When to Walk Away from the Deal Sometimes a title problem is too severe or too uncertain to resolve. Consider walking away if: - The seller **refuses or is unable** to clear significant liens or judgments - A **boundary dispute or ownership claim** is actively being litigated with no resolution timeline - The **title company refuses to insure** the property, even with exceptions - The cost of resolving the issue **exceeds the property's value** or your budget If you have a [title contingency in your contract](https://www.opendoor.com/articles/home-buying-contingencies), you can typically cancel the purchase and receive your [earnest money deposit](https://www.opendoor.com/articles/what-is-earnest-money) back. ## Title Insurance: What It Costs and Why You Need It One of the most common questions from homebuyers — right alongside *"what is a preliminary title report?"* — is **how much does title insurance cost?** The prelim report and title insurance are directly connected: the report is the research; the insurance is the protection that follows. ### How a Preliminary Title Report Connects to Title Insurance Think of the preliminary title report as the title company's investigation and the title insurance policy as the guarantee that comes after. The title company reviews public records, identifies any issues, and lists the conditions and exceptions in the prelim report. Once all conditions in Schedule B-I are met and exceptions in Schedule B-II are documented, the title company issues a **title insurance policy** at closing. Title insurance protects the policyholder against financial loss from defects that existed *before* the policy date but weren't discovered during the title search — things like forged documents, undisclosed heirs, or recording mistakes. ### Owner's Title Insurance vs. Lender's Title Insurance There are two types of title insurance policies, and understanding the difference is essential: | | **Owner's Title Insurance** | **Lender's Title Insurance** | | **Who it protects** | The buyer/homeowner | The mortgage lender | | **Who typically pays** | Varies by state and negotiation (often the seller) | Typically the buyer | | **Coverage amount** | Purchase price of the home | Outstanding loan balance | | **Required?** | Optional (but strongly recommended) | Required by virtually all lenders | | **Duration** | As long as you or your heirs own the property | Until the loan is paid off or refinanced | | **Average cost** | $500–$3,500 depending on property value and state | $150–$1,500 depending on loan amount and state | ### How Much Does Title Insurance Cost? The **title insurance cost** depends on several factors, but here's what to expect: - **National average**: Title insurance typically costs between **$1,000 and $4,000** for a median-priced home, according to the [National Association of Realtors](https://www.nar.realtor/). This figure includes both the owner's and lender's policies combined. - **As a percentage**: Expect to pay roughly **0.5% to 1%** of the home's purchase price for title insurance. - **One-time premium**: Unlike homeowners insurance, title insurance is a **single payment made at closing** — there are no monthly or annual premiums. **Factors that affect title insurance cost:** - **Property value** — higher purchase prices mean higher premiums - **State regulations** — some states (like Texas, Florida, and New Mexico) set rates by regulation, while others allow insurers to compete on price - **Type of policy** — simultaneous issue discounts (buying both owner's and lender's policies at once) can save 10–40% - **Property history** — properties with complex title histories or prior claims may cost more to insure - **Reissue rates** — if the seller recently purchased the property and has an existing policy, you may qualify for a discounted "reissue" rate For a more detailed breakdown of all fees you'll encounter, see our guide to [closing costs for buyers](https://www.opendoor.com/articles/closing-costs-for-buyers). ### Who Pays for Title Insurance? Who pays for title insurance varies by state and local custom: - In many **Western states** (California, Washington), the seller traditionally pays for the owner's policy - In most **Eastern and Southern states**, the buyer typically pays for both policies - In every state, the terms are **negotiable** — your [purchase agreement](https://www.opendoor.com/articles/how-to-make-an-offer-on-a-house) can specify who pays what Your real estate agent can advise you on the local norms in your market. ### Is Title Insurance Worth It? Given that title insurance is a one-time cost that protects against potentially catastrophic financial loss — like discovering after closing that a [lien](https://www.opendoor.com/articles/what-is-a-lien-on-a-house) you didn't know about entitles a creditor to foreclose — the answer for most buyers is a definitive yes. The preliminary title report catches most issues, but no title search is perfect. Title insurance exists to cover what the search misses. [Get your offer](#) ## Frequently Asked Questions ### What is included in a preliminary title report? A preliminary title report includes the property's legal description, current ownership and vesting information, recorded liens and encumbrances, easements, CC&Rs and deed restrictions, property tax status, pending legal actions, and title exceptions. It provides a comprehensive snapshot of everything recorded against the property in public records. ### How much does a preliminary title report cost? In most transactions, the cost of the preliminary title report is bundled into the title and escrow fees, which typically range from $150 to $400. In many cases, the buyer doesn't pay separately for the prelim report — it's included as part of the overall title insurance and escrow package. ### How long does it take to get a preliminary title report? A preliminary title report is usually delivered within **5 to 15 business days** after escrow is opened, though some title companies can produce one in as few as 3 days. Timelines depend on the property's history, the county recorder's accessibility, and the title company's current workload. ### What is the difference between a title report and title insurance? A preliminary title report is the **research document** that reveals the current condition of a property's title. Title insurance is the **protection policy** issued based on that research. The report identifies known issues; the insurance covers financial losses from unknown defects that existed before the policy date but weren't discovered during the title search. ### Who orders the preliminary title report? In most transactions, the **escrow officer or buyer's lender** orders the preliminary title report from the title company. In some states or sale-by-owner situations, the seller may order the report in advance. Either the buyer's or seller's agent can also initiate the order depending on local custom. ### What are common title defects? Common title defects include outstanding liens (mortgage, tax, mechanic's, or judgment liens), forged documents, undisclosed heirs, recording errors, boundary disputes, missing signatures on deeds, and illegal transfers. According to [ALTA](https://www.alta.org/), roughly 25% of transactions involve some form of title issue that must be addressed before closing. ### How much does title insurance cost? Title insurance typically costs between **$1,000 and $4,000** for a median-priced home, or approximately **0.5% to 1%** of the purchase price. It's a one-time premium paid at closing. Costs vary by state, property value, and whether you're purchasing an owner's policy, a lender's policy, or both. ### Can you buy a house without a clear title? Technically it's possible, but it's extremely risky and nearly impossible with conventional financing. Most lenders require a clear title and a lender's title insurance policy before funding a loan. Buying a property without a clear title means you could face ownership disputes, undisclosed liens, or legal claims after closing — with no insurance protection. Cash buyers occasionally take on this risk at a significant discount, but it's not recommended without legal counsel. *Thinking about buying or selling a home? Opendoor simplifies the process from \[offer to closing\](https://www.opendoor.com/articles/closing-on-a-house). Get a free, no-obligation offer on your home or browse listings in your area to get started.* --- *Originally published at [https://www.opendoor.com/articles/what-is-a-preliminary-title-report](https://www.opendoor.com/articles/what-is-a-preliminary-title-report)*