Buying and moving into a new home is one of life’s great experiences, especially if you’re buying your first home. From getting that pre-approval to the “yes!” response on an offer to closing and moving in, every step is exciting. And while the process is engaging and fun, it’s important to prepare for moving day […]
What is a preliminary report?
Before the title company begins the closing process on a property, they will give the homebuyers a document called a preliminary report. This documentation is essential in the sale of a property for a number of reasons:
The preliminary report includes legal information about the property
A preliminary report is a document that officially establishes the legal ownership of a property. This document helps verify that the title to the property is straightforward and the owner has the right to sell. The preliminary report will include information like:
- The owner’s name
- The legal description of the property
- Any exceptions to the title policy
- Any liens or outstanding debts
- Any restrictions regarding the use of the property
When reading through your preliminary report, take notice of ownerships rights that show the ownership interests of parties other than the seller. For example, if the seller is divorced but their ex-spouse is still on the title.
The preliminary report is a prelude to getting title insurance
It’s important to note that the preliminary report isn’t the same as title insurance. Where title insurance protects lenders and homebuyers from financial loss from title defects, a preliminary report is an offer to insure. When the title company gets sent a notification that their services are needed, they begin the process of researching the home to include in the preliminary report.
The title company will not issue a title insurance policy before a preliminary report is made. If a defect, lien, or encumbrance is found, your title company will help you work to resolve them.