When and how is the Preliminary Report produced? Shortly after escrow is opened, an order will be placed with
the title company which will then begin the process involved in producing the
report.
This process calls for the
assembly and review of certain recorded matters relative to both the property
and the parties to the transaction. Examples of recorded matters include a deed
of trust recorded against the property or a lien recorded against the buyer or
seller for an unpaid court award or unpaid taxes.
These recorded matters are
listed numerically as “exceptions” in the preliminary report. They will remain
exceptions from the title insurance coverage unless eliminated or released
prior to the transfer of title.
What should I look for when reading my Preliminary Report?
You will be interested, primarily, in the extent of your ownership rights. This means you will want to review the ownership interest in the property you will be buying and the description of the property, as well as any claims, restrictions or interests of other people involving the property.
The report will note in a
statement of estate, the degree, quantity, nature and extent of the owner’s
interest in the real property. The most common form of interest is “fee simple”
or “fee” which is the highest type of interest an owner can have in land.
Liens, restrictions and
interests of others which are being excluded from coverage will be listed
numerically as “exceptions” in the preliminary report. These may be claims by
creditors who have liens or liens for payment of taxes or assessments. There
may also be recorded restrictions which have been placed in a prior deed or
contained in what are termed CC&Rs—covenants, conditions and restrictions.
Finally, interests of third parties are not uncommon and may include easements
given by a prior owner which limit your use of the property. When you buy
property you may not wish to have these claims or restrictions on your
property. Instead, you may want to clear the unwanted items prior to purchase.
In addition to the
limitations noted above, a printed list of standard exceptions and exclusions
listing items not covered by your title insurance policy may be attached as an
exhibit item to your report. Unlike the numbered exclusions, which are specific
to the property you are buying, these are standard exceptions and exclusions
appearing in title insurance policies. The review of this section is important,
as it sets forth matters which will not be covered under your title insurance
policy, but which may wish to investigate, such as governmental laws or
regulations governing building and zoning.
Tim Brodowski, MBA, CNE, GRI, BPOR, CIEA, MilRes SpecCall/Text 858-354-2354
Email TimBro97@aol.com
www.TimBroHomes.us
BRE #01224576
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