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 propertyA 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:
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.
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.
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