Reading Preliminary Title Reports

August 5, 2008 | By Kelley Koehler | Filed Under Home Buying

I wrote earlier about why you review the preliminary title report, but let’s just review what a preliminary title report is. We call it “the prelim,” in agent-speak around Tucson.

If you’re buying a home in Tucson and using the standard resale contract, then you should receive a preliminary title report from the title company within a few days of opening escrow – that is to say, within a few days of coming to an agreement on price and terms with the Seller.

The “prelim” is a preliminary title commitment, it’s the title company committing to issue title insurance subject to the terms inside.

It starts with a page called “Schedule A.” Schedule A describes who will be insured, to what amount, and describes the property on which they’ll issue title insurance. The Seller usually pays for a title policy for the Buyer, in the amount of the sale, and then the Buyer usually pays for a title policy for their lender, in the amount of the loan.

Next is “Schedule B.”

Schedule B Section 1 describes the requirements that must be met before the title policy is issued. Typically in this section, you see the Seller’s loans that must be paid off, any taxes due, anything that must be satisfied before the policy can be issued. This is a must-read section of the prelim. Sometimes, there’s an odd lien or requirement that you need to find out about sooner rather than later.

Schedule B Section 2 are exceptions to the title policy – things the title policy will not cover. Usually, this list includes the recorded easements, future tax liens, water rights, at least in this part of Arizona, deed restrictions or recorded CC&Rs, things of that nature. In the link at the top of this post, you’ll see where I found a well agreement and an odd utility agreement within Schedule B Section 2. This is also a must-read section.

If you don’t understand what you see in the Prelim, you can always ask your agent or title officer to explain it to you. Better safe than sorry!

Comments

2 Responses to “Reading Preliminary Title Reports”

Wine Dog on August 21st, 2008 6:57 am

This old title officer loves you for this post. Now please re-run it every 10 days.
Cheri Smith on June 10th, 2009 4:52 pm

Kelley, that’s one of the best explanations of the prelim I’ve ever read! Succinct but also very clear. Thank you!

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