A preliminary report is an important part of the transaction. It details the condition of the title of the property. When an escrow is opened, the escrow officer will order a preliminary report. (Those of us in the business frequently refer to this report as a "prelim" or "pre"). This report generally takes three to five working days to complete and a copy will be sent to the seller and their agent as soon as it is prepared.
Preliminary reports are issued only after a thorough search and evaluation of public records. They are also based on information that has been gathered by the title company over the course of many years. The preliminary report shows any liens or judgments against the property. It shows any unpaid loans or taxes, any rights of way or easements which have been granted on the property or any other encumbrances which may "cloud" title to the property.
The escrow officer will thoroughly review the preliminary report as soon as s/he receives her/his copy. Rest assured, s/he has many years of experience and can quickly spot red flags. The real estate agent will also receive a copy and should alert the seller if there are important matters which must be cleared before escrow closes. Throughout the course of the escrow, the escrow and title officers will be working closely with the seller and the agent to clear up any problems to the title. In many cases this means working closely with the local tax collector, child support officers, contractors and utility companies, the state Franchise Tax Board, the IRS, and any other agency which may have placed a lien on the property.
Buyers and sellers may be unfamiliar with some of the terms used on the preliminary report. The real estate agent or escrow officer can explain each of the points in detail and will answer any questions. We can also help. Please ask us! We want you to be comfortable every step of the way. .
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