You’re ready to buy a home, and the title company has begun the closing process.  You’re then given a document called a preliminary report.  What is that?

title insuranceA preliminary report is a document that officially establishes the legal ownership of a property.  This document is essential to purchasing a property as it helps verify that the title is free and clear and the owner has a right to sell the property.

The preliminary report will include items such as the owner’s name, the property’s legal description, and any exceptions to the title policy.

Preliminary Reports Provide Legal Information About the Property

The preliminary report lists title defects, liens, and encumbrances on the property, which would be excluded from coverage if the requested title insurance policy were to be issued as of the date of the preliminary report.  Preliminary reports also provide a detailed legal description of the property, including:

Preliminary Reporting Isn’t the Same as Title Insurance

A preliminary report is an offer to insure, while title insurance protects lenders and homebuyers from financial loss sustained from defects in a title to a property.

The title company will not issue a title insurance policy before a preliminary report is made.

The cost of title insurance varies by state and is based on factors like:

  • Your lender
  • Purchase price
  • Down payment

What If a Defect, Lien, Or Encumbrance is Found?

If the preliminary report uncovers issues, like unpaid property taxes, your title company will help you resolve them.  In the case of unpaid property taxes, either the buyer or the seller can prorate depending on the real estate contract and closing disclosure.

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Contact Eric Merchant At 314.541.1218