The preliminary title report (the 'prelim') shows who owns the property and what's recorded against it — liens, easements, and exceptions to clear title. Reading it carefully during escrow protects you from inheriting surprises.
What's in a prelim
- Vesting: the current legal owner(s).
- Legal description and parcel number.
- The policy and coverage to be issued.
- Schedule B exceptions: liens, deeds of trust, easements, CC&Rs.
- Property taxes and assessments.
- Any judgments or recorded notices.
How to read it line by line
- Confirm the owner matches the seller.
- Verify the legal description and parcel number.
- Review each Schedule B exception.
- Identify which items the seller must clear (e.g., existing loans).
- Flag easements or CC&Rs that affect your use.
- Ask the title officer to explain anything unclear.
Common exceptions explained
- Deeds of trust: existing mortgages, paid off at closing.
- Easements: rights others have to use part of the property.
- CC&Rs: recorded restrictions, often via an HOA.
- Tax liens or judgments: must typically be cleared to deliver clear title.
This is general information, not legal, tax, or financial advice — consult a licensed professional for your situation.
Why it matters
Title issues that aren't resolved can cloud ownership. The escrow/title process exists to clear these before recording, and your title insurance protects against covered defects. Where a number varies, confirm current figures for your transaction.
Questions to ask
Ask which exceptions remain after closing, whether any easements limit your plans, and what the title policy covers. A clear prelim is essential to a clean close.
Working with your title officer
Treat the prelim as a checklist: confirm which exceptions clear at closing and which survive. Your title officer is your best resource for explaining anything unclear.
Frequently Asked Questions
What is a preliminary title report?
A report showing the current owner and recorded encumbrances like liens, easements, and CC&Rs before issuing title insurance.
What are Schedule B exceptions?
Items not covered by the title policy, such as easements, CC&Rs, liens, and taxes; review each carefully.
Who clears existing loans on title?
Existing deeds of trust are typically paid off and released through escrow at closing.
Do easements affect my use of the property?
They can — easements grant others rights to use part of the property; review their scope.
What does title insurance cover?
It protects against covered title defects; coverage varies by policy. Where a number varies, confirm current figures for your transaction.
Who explains the prelim to me?
Your agent and the escrow/title officer can walk through each item.
