What is Preliminary Title Report – Understanding it from a Lender’s Perspective

Getting a Preliminary Title Report that is both informative and accurate is important for any lender who is considering approval of a mortgage. Here is how this report which is vital to a successful and profitable sale of a property should be read, and the important questions that are usually asked about it. With a good understanding of the Preliminary Title Report, lenders can put in place measures so that it is delivered in time and it provides the most benefits during the mortgage process.

What is included in the Preliminary Title Report?

In the preliminary Title report details about a property’s owners, any easements, liens and encumbrances are included. These details are collected from records about the property which are usually present with the county, and include a title search that shows the number of owners ranging over a 35 to 50 year period. Importantly the report shows the liens and encumbrances that title insurance will not cover when it is issued.

Why is a Preliminary Title Report Required?

The preliminary title report is essential when lenders need to obtain an insurance policy as it influences the terms under which it will be issued. Since the report lists any defects, encumbrances and licenses that will not be covered under an insurance policy it is vital to the transaction and needs to be checked in details by all parties that are involved in a real estate deal. Once the title report is scrutinized the buyer can stipulate that certain encumbrances or defects be handled before the sale is put through.

When does the Report Come into Being?

After the escrow is opened and a closing attorney or title company is included in the process the preliminary title report will be ordered. The ordering of this report is usually handled by the title company, while attorneys that handle the closing usually have staff with legal knowledge who go through the process of “running” the title. In some cases this work is outsourced to companies overseas who offer a range of title services to lenders, and specialize in reviewing the records that are necessary for creating the preliminary title report.

What are Some of the Exceptions that are Seen in the Report?

During the examination of records relevant to the property and the parties associated with the transaction exceptions such a deed of trust, or liens pertaining to legal dues and taxes that have remained unpaid will crop up. These are important items as that need to be cleared as they are exempted from coverage by insurance policies.

How does the Preliminary Title Report Relate to Title Insurance?

The Preliminary Title Report is often times confused with insurance and it should not be as it does not provide the lender with any protection from loss that could arise. The insurance that protects the lender from incurring loss needs to be purchased by the buyer and is referred to as a “title commitment” Navigating the convoluted pathway of creating a Preliminary Title Report to the process of escrow until it is closed, and the property sold is time consuming. This entire process, however can be outsourced title support services to an offshore company, so that the process of Preliminary Title Report creation can be streamlined by experts. Contact Expert Mortgage Assistance to learn how it brings in its expertise to simplify the process of title report preparation, and how our wide experience can help you add more value to the way you conduct your business.