Much like a pre-listing inspection gives sellers a heads-up about serious maintenance issues they might need to tackle before selling a home, a preliminary title report can help you get your finances in order so that you can transfer ownership of your property without any trouble.<\/p>\n
Title issues can take a long time to resolve, so it\u2019s a good idea for sellers to address them as early as possible.<\/p>\n
Titling and deed issues accounted for 9% of contracts with delayed settlements in August 2019, according to the National Association of Realtors\u2019 monthly Realtors Confidence Index<\/i> survey.<\/p>\n
\u201cThat’s extremely important to know prior to putting it on the market,\u201d said Sandra Van Camp<\/a>, a real estate agent with eighteen years of experience in Rochester and Western New York.<\/p>\n Let\u2019s dive deeper into what a preliminary title report is and how it can help you get ahead on your home sale.<\/p>\n A preliminary title report shows all ownership on a specific parcel of land<\/a>, \u201ctogether with the liens and encumbrances\u201d that would not be covered under a subsequent title insurance policy, says the California Land Title Association (CLTA). In other words, a preliminary title report shows potential buyers any restrictions on the land use or any liens and other financial issues they\u2019ll acquire if they buy the property today.<\/p>\n A preliminary title report provides an opportunity for sellers to remove any items a buyer or the buyer\u2019s lender might find objectionable, CLTA says. It can take a long time to correct or handle title report issues, which is why many agents suggest that sellers order a preliminary title report; that way, sellers can start working on clearing up any title problems before the house is ever listed.<\/p>\n Van Camp and Jennifer Murtland<\/a>, a top real estate agent in the Cincinnati, Ohio, area who also serves northern Kentucky, said they like to run preliminary title reports before listing a property. Public records<\/a> often have a decent amount of detail about a home\u2019s title. However, depending on the age of the property and complexity involved, there are times when these preliminary searches don\u2019t turn up a problem until a buyer submits an offer.<\/p>\n \u201cA lot of people don\u2019t realize they have another mortgage, or that they received federal funding that they maybe have to pay back. It\u2019s helpful to know, too, because the mortgage will be a lien on the property, and then that’ll tell them about what they owe, approximately,\u201d said Murtland, an agent for nine years.<\/p>\n By contrast, a full title report is a much more comprehensive history of recorded documents<\/a> relating to the property and the condition of the title. It can go back 30 to 50 years, according to RealEstateLawyers.com, part of the consumer-oriented legal website Nolo.com.<\/p>\n Getting a full title report is a preliminary step to securing title insurance. When a buyer takes out a mortgage, the lender requires title insurance<\/a>, which protects the lender\u2019s interest in the property until the loan is refinanced or paid off, explains First American Title Insurance Company<\/a>, based in Santa Ana, California. A second type of title insurance protects the homeowner\u2019s rights for as long as they or their heirs own the property. (In a standard transaction, the seller pays for the buyer\u2019s title insurance policy<\/a>, while the buyer pays for the lender\u2019s title insurance.)<\/p>\n \u201cEven the most skilled title professionals may not find all problems associated with a property,\u201d First American notes, explaining the need for title insurance. \u201cSome risks, such as title issues due to filing errors, forgeries, or undisclosed heirs<\/a>, are difficult to identify.\u201d<\/p>\n An issue such as a utility easement or lien could lead to delays in closing, a deal falling apart, a buyer asking the seller to pay for a rate lock extension on a mortgage<\/a>, or even a lawsuit. \u201cIf they can\u2019t close, people could be suing you because of the fact they\u2019re out of house and home because their lease is up, or they had to move out of their house, but they can\u2019t move into your house because we still don\u2019t have clear title,\u201d Van Camp said. This unwelcome scenario can be avoided by purchasing a preliminary title report.<\/p>\n A preliminary title report includes<\/a> the owner\u2019s name, the street address of the property, the date to which the records have been updated, and the individual who requested the report (typically an escrow or title insurance company), according to North American Title (NAT) Company<\/a> of Pleasant Hill, California, which provides title reports to members of CLTA.<\/p>\n The report then goes into further detail as follows:<\/p>\n A preliminary title report will also include issues that a buyer doesn\u2019t want to inherit \u2014 and that a seller needs to resolve. These include:<\/p>\n Certain problems<\/a> crop up frequently on preliminary title reports. Some of these are human errors, while others might be unknown legal issues<\/a> or even attempts at fraud.<\/p>\n According to First American Title Company and Express Title Closing<\/a> of Johnson City, Tennessee, common title problems include:<\/p>\n The most common issues that Van Camp and Murtland say they\u2019ve seen on preliminary title reports are tax liens and unpaid child support. But every so often, a listing throws them a curveball.<\/p>\n Van Camp had one listing where the sellers had bought the house in 1990, but an owner on the previous deed, which dated several years prior, could not be found. \u201cDeals fell through,\u201d she said, adding that the property eventually sold.<\/p>\n Murtland represented one seller who said he wasn\u2019t married when she listed the house. Ohio is a dower state<\/a>, meaning that property cannot be sold unless both spouses agree or one spouse relinquishes interest in the property. \u201cWe get to the closing table, and the title person is like, \u2018Where\u2019s your spouse?\u2019 [The client] said, \u2018We\u2019re separated.\u2019\u201d<\/p>\n A preliminary title report would have noted that the couple was still married, she said. \u201cI did start changing my questions to, \u2018Are you legally married now?\u2019\u201d she added.<\/p>\n A preliminary title report not only can alert you to any possible red flags with your home, but it can also launch the title search earlier, saving time and hassle at the closing table. \u201cMany sellers can\u2019t find their title,\u201d Van Camp said. Depending on how old the house is, the title company might have gone out of business, so the title might have to be reconstructed.<\/p>\n Murtland said that if her seller chooses the title company to perform the title search<\/a>, she\u2019ll present the work to the buyer for the buyer\u2019s lender to accept, \u201cso then there\u2019s no additional cost on the buyer\u2019s or the seller\u2019s side, and people aren\u2019t doing the same work twice.\u201d<\/p>\n Another way sellers can speed up the title search process is to provide the title company with a copy of the title insurance policy from when they bought the house<\/a>. In some cases, if the policy was purchased within the past 15 years, the search can be limited to the duration during which they\u2019ve owned the house instead of doing a full search on the title back to when the house was built.<\/p>\n Because it\u2019s part of a real estate transaction, preliminary title work occurs after your real estate agent either consults with a title company (some agencies have their own) or a title attorney, depending on the laws in your state.<\/p>\n If you\u2019d like to request a preliminary title report on your own, you can obtain one from any of the four major title companies (Fidelity<\/a>, Stewart<\/a>, First American<\/a>, or Old Republic<\/a>) for a fee of a few hundred dollars.<\/p>\n In addition, the title research and consulting company U.S. Title Records<\/a>, based in Dover, Delaware, also serves every county nationwide and U.S. territories, providing a 10- to 30-year title search<\/a> and transfer history for $265. The company does other searches of property records<\/a>, including mortgages, home equity lines of credit, and liens, for prices ranging from $19.50 to $275.<\/p>\n Regardless of how you acquire this report, what\u2019s inside might surprise you \u2014 all the more reason to remove any potential obstacles to your sale. \u201cThe benefit of preliminary title work is that if there is a lien, you have time to clean it up,\u201d Murtland said.<\/p>\n Header Image Source: (The Coach Space\/ Pexels)<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" A preliminary title report can help you get your finances in order so that you can transfer ownership of your property without any trouble.<\/p>\n","protected":false},"author":76,"featured_media":12676,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"cybocfi_hide_featured_image":"","footnotes":""},"categories":[243,322],"tags":[],"class_list":["post-12675","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-contracts","category-logistics"],"acf":[],"yoast_head":"\n![\"A](\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2019\/10\/preliminary-title-report-paper.jpg\")
<\/a>What are preliminary title reports, full title reports, and title insurance?<\/h2>\n
Preliminary title reports<\/h3>\n
Full title reports and title insurance<\/h3>\n
![\"\"](\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2019\/10\/preliminary-title-report-text.jpg\")
<\/a>What\u2019s on a preliminary title report?<\/h2>\n
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Common title problems that can trip up your home sale\u00a0<\/b><\/h2>\n
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![\"A](\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2019\/10\/preliminary-title-report-table.jpg\")
<\/a>How a preliminary title report can help your sale<\/h2>\n
How to obtain a preliminary title report<\/h3>\n