Most real estate transactions involve a preliminary title report. This report has details relating to the condition of title for each parcel of real estate. It will verify ownership, reveal any liens and encumbrances and identify easements. These title search elements are found in county property records. Once the information is gathered, it sets forth the conditions for which the title insurance company will issue a title insurance policy. A preliminary title insurance report is usually run once a real property sale opens escrow.
The preliminary report will also outline exclusions that would not be covered under the title insurance policy. The exclusions section of the report is important because it informs all parties of problems before a sale will close. Unpaid taxes, liens, unrecorded easements and judgements will be “clouds on the title” that will have to be resolved prior to change of ownership and before a title insurance policy can be issued.
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