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- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
About Preliminary Report
If you are looking to purchase or sell a property, there are many documents that you have to go through. Every document is important.
However, there is one of the documents that is as significant as others. This is called a preliminary report.
In this post, we will learn what is a preliminary title report along with its significance.
What is a Preliminary Report?
A preliminary report is usually ordered once escrow is opened. It takes up to 48 hours or less to receive a preliminary report.
A preliminary report contains the history of the property which goes back about 60 years. Once the preliminary report is ordered, the title company looks into who has owned the property through those last sixty years.
The title company will make sure that those deeds are accurately transferred from owner to owner.
The title company also checks if the current owner that owns the property has anything against the property like taxes, CC&R, judgments, liens, etc. so that the title company can transfer the title of the property to the new owner.
If any such things are pending from the current owner, they have to clear those before the title company could transfer the title deed in the name of the new owner.
What is the Importance of Preliminary Report?
A preliminary report is a document that is included in the seller’s disclosure. The preliminary report gives you insights into whether or not the current owner has a legal right to the property.
It also shows if there are any outstanding liens by any of the previous owners. A new buyer would not like to take any responsibility for the liens owned by the previous owners of the property.
It also will let the title company know if any taxes are due on the property by the current owner.
A preliminary report will always give you a clear picture of the title of the property. No one would like to have any title-related issues when they are planning to purchase a home.
Hence, a preliminary report is mandatory for the seller to provide while selling the property.
The preliminary report gives purchasers and sellers significant data about the title status of a property.
For purchasers, it gives an update on any title-related issues that could affect your purchasing decision before you close on the transaction.
For sellers, getting a preliminary report before putting the house on the market can make you aware of any record issues or possible roadblocks that you can fix before the buyer signs the sales contract.
A preliminary report will affirm who claims the property, subsequently affirming to potential purchasers that you own the property.
It will even let you know the significant things that you want to manage to sell the property.
For example, assuming there are unpaid liens or property taxes. It’s observed in numerous areas to include it with your disclosures so including it simply matches up to the purchaser’s expectations.
How to Get a Preliminary Report?
If you are a seller and you want to get a preliminary report, it is suggested that you get in touch with your real estate agent who can assign a title company to order one for you.
It is recommended that you order the preliminary report as soon as you put your property on sale.
This is so that you don’t have to wait till the end for any surprises when the buyer signs the contract.
If there are any title-related issues after the contract is signed could lead to the deal being canceled.
You can get a preliminary title report free of charge, or conceded installment provided that the home sells at the closing of escrow, by picking a title organization ahead of time to be the title insurer and opening escrow with them.
How to Understand the Preliminary Report?
When you are reading the preliminary title report for a property, always make sure that the person who is selling the property has the legal right to sell the piece of property.
Also, ensure you take a look at any outstanding property taxes or unpaid liens on the property as it may affect your decision for purchasing that piece of property.
If the seller disputes the outstanding liens or decides to go for legal action, your plan of buying that property could be delayed as you as a buyer might have taken pre-approval from the lender which could expire before the issue is resolved.
Conclusion
As a possible purchaser, it is important for you and your realtor or attorney to do proper research on the preliminary title report.
You need the title to be clear as possible. If there are any title hindrances it may affect your decision to buy that property.
You need to understand the issues completely to close on the property that you are looking to buy.
