Who Is Responsible for Ordering the Preliminary Title Report?

A preliminary title report is a foundational document in real estate transactions, serving to protect all parties involved. It provides an early assessment of a property’s title status, identifying potential issues that could hinder a clear transfer of ownership. This initial review helps mitigate risks and ensures a smooth progression toward closing.

Understanding the Preliminary Title Report

A preliminary title report, often referred to as a “prelim,” is a snapshot of the property’s public records at the time it is issued. Its primary purpose is to reveal the current ownership status and identify any existing liens, encumbrances, or defects that could affect the property’s clear title. This report provides prospective buyers and lenders with an understanding of the property’s legal history and any potential claims against it.

Key information typically found within the report includes the property’s legal description, recorded easements, unpaid property taxes, existing mortgages, and judgments that could attach to the property. Understanding these details helps prevent future legal disputes over ownership.

Determining Who Orders the Report

The responsibility for ordering the preliminary title report varies based on local practices and the specific terms outlined in the purchase agreement. In many areas, the buyer or their real estate agent initiates the request as part of their due diligence. In other regions, the seller or their agent may order the report to proactively address potential title issues.

Lenders also play a significant role, often requiring a preliminary title report to ensure the property can serve as secure collateral for a mortgage. Regardless of who initiates the order, the escrow or title company frequently facilitates the process as a neutral third party. This company conducts the necessary research and issues the report to all relevant transaction participants. The party responsible for the title insurance premium, usually negotiated in the purchase agreement, often influences who orders the report.

Steps in Ordering a Preliminary Title Report

Once the ordering party is determined, the process typically begins by contacting a chosen title or escrow company. This company specializes in researching property records and providing title insurance. To place an order, the title company requires basic information, such as the property’s full address and the legal names of the buyer and seller.

Providing a copy of the executed purchase agreement is necessary, as it contains details about the transaction and involved parties. The title company then examines public records related to the property. This research includes reviewing deeds, mortgages, tax records, and other recorded documents to compile the preliminary report.

Interpreting and Acting on the Report

After the preliminary title report is generated, it is distributed to all relevant parties, including the buyer, seller, real estate agents, and the lender. It is important to meticulously examine the report for any “exceptions,” which are items or conditions that the title insurance policy will not cover. Common exceptions include unreleased liens, existing easements, or boundary encroachments.

If exceptions are found, such as an outstanding mortgage that was not properly discharged, parties typically have a specified period to raise objections. The seller is responsible for resolving these issues, which might involve paying off a lien or working with the buyer to negotiate a solution for an easement. The objective is to clear all identified exceptions, allowing for the conveyance of a “clear title” at closing.