Learning how to read a title report means working through it section by section: confirm the ownership and legal description on Schedule A, then read every requirement and exception on Schedule B, and flag anything that could threaten your ownership before you sign at closing. The document follows a predictable structure, and once you know what belongs in each part, the report becomes a checklist rather than a wall of legalese.
Know Which Document You Have
Three documents get called “the title report” in casual conversation, and they are not the same thing. A preliminary title report is a snapshot of the property’s current ownership and recorded encumbrances, with no contractual promise behind it. A title commitment goes further: it is the title company’s agreement to issue an insurance policy once specific conditions are met. The final title insurance policy is the contract that protects you after closing. The reading approach in this article works for all three because they share the same structure, but the commitment and the policy are the ones with legal teeth.
You will usually receive the preliminary report or commitment within a few days to a week after your offer is accepted. Read it as soon as it arrives. Waiting until closing week leaves no room to fix anything.
Schedule A: Verify the Basics
Schedule A is the foundation of the report. It states the effective date, the current owner’s legal name, how title is held, the legal description of the property, and — in a commitment — the proposed policy amount and the insured party. Errors here ripple through everything else, so this is where careful reading pays off first.
The Effective Date
The effective date is the moment the title company last searched public records. Anything recorded after that date will not appear on the report. If weeks pass between the effective date and your closing, a new lien, judgment, or lawsuit could be filed against the property without showing up. Title companies typically run a final check the day before or the day of closing to narrow the gap. Confirm that is happening. If there is any reason to think the seller is in financial distress, ask whether documents can be recorded before funds are released rather than after.
The Legal Description
The legal description defines the property in terms surveyors and courts can use. A street address is not precise enough. You will see one of two formats. In subdivisions, a lot-and-block description references a recorded plat map showing how the subdivision is divided into individual lots. In rural areas, a metes-and-bounds description traces the perimeter from a starting point using compass bearings and distances, eventually returning to where it began. Metes-and-bounds descriptions are harder to read and mistakes are more common; an incorrect bearing or distance can shift a boundary line onto a neighbor’s land. Compare the legal description against your deed and any survey you have. If they do not match exactly, raise it with the title company before closing.
How Title Is Held
Vesting tells you how the current owner holds the property, and it controls what has to happen for the property to transfer. The most common forms:
- Sole ownership. One person holds complete title. Simple to transfer, but the property goes through probate at death unless other estate planning is in place.
- Joint tenancy with right of survivorship. Two or more owners hold equal shares. When one owner dies, that share automatically passes to the surviving owners without probate. All owners must sign to sell.
- Tenancy in common. Two or more owners hold shares that can be unequal. Each owner can sell or bequeath a share independently, which means a co-owner’s heir could become your co-owner.
- Community property. Available in some states for married couples or registered domestic partners. Property acquired during the marriage is owned equally, and this form can carry favorable tax treatment when one spouse dies.
If the vesting does not match how the seller described the ownership, stop and ask. A seller who claims sole ownership but whose title shows joint tenancy with an ex-spouse cannot close without that other person’s signature.
Schedule B, Part One: Requirements
Schedule B is where most of the substance lives. It is usually divided into two parts. Part one lists everything that must be completed before the title company will issue the policy. Many items are handled by the seller, the lender, or the title company itself, not by you. Typical requirements include paying off the seller’s existing mortgage, clearing overdue property taxes, and recording the new deed and mortgage documents. This section is still worth reading closely because it reveals the seller’s current mortgage balance, outstanding tax obligations, and any additional documentation the title company needs.
Schedule B, Part Two: Exceptions
The exceptions section is the part buyers most often underread, and it is the part that matters most. Every item listed here is something your title insurance policy will not cover. If a problem tied to one of these items surfaces after closing, the title company will not pay a claim or defend you.
Exceptions come in two kinds. Standard exceptions appear on nearly every policy and cover broad risks: the rights of anyone currently occupying the property, boundary issues a survey would reveal, unrecorded easements, and mechanic’s liens not yet in public records. Special exceptions are specific to the property you are buying, such as a particular recorded easement, a specific CC&R, or a known encroachment.
The strategic move is to remove standard exceptions where you can. An updated survey, for example, can eliminate the survey exception. Lenders often push for this. Fannie Mae’s guidelines provide that when a survey is not obtained, the lender must secure an endorsement covering survey-related risks, and where neither a survey nor an endorsement is customary, the title policy cannot contain a survey exception at all.1Fannie Mae. Title Exceptions and Impediments Every standard exception you remove expands the protection your policy provides.
How to Read the Common Schedule B Items
Easements
An easement gives someone other than the owner the right to use part of the property for a specific purpose, such as a utility company running power lines, a neighbor crossing to reach a road, or a city maintaining a drainage pipe.2Legal Information Institute. Easement Some are obvious and harmless. Others can block you from building an addition, installing a pool, or putting up a fence. Read each one and work out exactly where on the property it falls and what it allows. A utility easement across the back ten feet of the lot is normal. A private access easement that lets a neighbor drive across your front yard is a different conversation.
Easements transfer with the property, so you cannot buy your way out of one at closing.2Legal Information Institute. Easement If an easement would be a dealbreaker, discover that now, not after you have hired an architect.
Liens
A lien is a legal claim against the property that secures a debt. Mortgages are the most common, followed by property tax liens for unpaid taxes, judgment liens from court orders, and mechanic’s liens filed by unpaid contractors. All liens must be satisfied or released before the seller can transfer clear title. The requirements section should show payoff amounts for existing mortgages, and the title company will coordinate the payoffs at closing.
Watch for judgment liens. They sometimes belong to previous owners and were never properly released, which can be a recording error that still takes weeks to clear. If you see a lien you do not understand, ask the title company for the underlying recorded document so you can see what debt it secures and how much is owed.
CC&Rs
Covenants, conditions, and restrictions are the rules governing what you can do with a property. They are most common in subdivisions and planned communities, and they run with the land, binding every future owner rather than only the original buyer.3Legal Information Institute. Covenants, Conditions, and Restrictions CC&Rs can regulate the color you paint your house, whether you can park a boat in the driveway, and whether you can rent the property out. The title report will reference a recorded document number. Request the full document and read it before closing, especially if you have specific plans for the property.
Encroachments and Survey Issues
An encroachment is a physical intrusion across a property boundary: a neighbor’s fence sitting two feet onto your lot, or your garage extending over a utility easement. Title reports routinely include a standard exception for any issues a survey would reveal, meaning the title company did not verify physical boundaries and will not cover disputes about them. A current survey is how you flush these problems out. If the survey reveals an encroachment, negotiate with the neighbor or the seller before closing. Ignoring one does not make it go away.
Red Flags That Can Derail a Closing
Most reports are straightforward. When they are not, the trouble tends to cluster around a few recurring problems.
Lis Pendens
A lis pendens is a recorded notice that a lawsuit involving the property is pending. It is Latin for “pending suit,” and it is one of the most serious items you can find on a title report. Anyone who buys the property while a lis pendens is on record is bound by the outcome of that lawsuit. If the plaintiff wins and the court voids the sale or awards the property to someone else, you lose. Most title companies will refuse to insure a property with an active lis pendens, and most buyers should refuse to close on one.
Breaks in the Chain of Title
The chain of title is the complete chronological record of every ownership transfer for the property.4Legal Information Institute. Chain of Title A break means a transfer was not properly recorded. A deed might never have been filed, a name might have been misspelled, or an estate might have transferred the property without probate. These gaps create uncertainty about whether the current seller actually has legal authority to sell. Fixing a broken chain can require tracking down prior owners, obtaining corrective deeds, or filing a quiet title action in court.
Unresolved Probate
When a property owner dies, the property typically has to pass through probate before it can be sold. If the report shows the owner of record is deceased and no probate has been completed, or shows multiple potential heirs, the seller may not have clear authority to convey the property. These situations can take months to resolve, and they occasionally reveal unknown heirs with competing claims.
Tax Sale History
If the property was previously sold at a tax sale for delinquent taxes, the title may carry lasting problems. Depending on the state, former owners may have redemption rights that let them reclaim the property even after a tax deed was issued. Tax deeds are generally quitclaim deeds, transferring only whatever interest the taxing authority had rather than guaranteeing clean title. A property with tax sale history in its chain often requires a quiet title action or additional curative work before a title company will insure it.
Clouds on Title
A cloud on title is any recorded claim or encumbrance that calls the owner’s clear ownership into question. Old unreleased mortgages from a prior sale, an incorrectly filed lien, a deed with a defective legal description — all of these are clouds. Some are easy to clear with a correction document. Others require negotiation with the party who filed the claim, or a court order removing it. The abstract of title, a historical summary of every recorded document affecting the property, is the tool title examiners use to trace these issues back to their source.5Legal Information Institute. Abstract of Title
How Title Defects Usually Get Resolved
Finding a problem does not automatically kill a deal. Most defects have standard remedies, and the title company handles many of them as part of its normal workflow.
- Clerical errors. A misspelled name or incorrect legal description usually needs a corrective deed or affidavit filed with the county recorder. The title company contacts the party who made the error, obtains the correction, and records it.
- Outstanding liens. Unpaid mortgages, tax liens, and judgment liens are resolved through payoff at closing. The title company collects payoff statements, disburses funds from the sale proceeds, and records the releases.
- Unreleased mortgages from prior sales. Sometimes a previous mortgage was paid off but the release was never recorded. The title company or settlement agent contacts the former lender to obtain and record the release document.
- Boundary disputes and encroachments. These may need a new survey, a boundary line agreement between neighbors, or, in serious cases, a quiet title action.
- Quiet title actions. When a defect cannot be resolved through paperwork alone (a missing heir, a forged deed in the chain, a disputed tax sale), a quiet title action asks a court to establish who legally owns the property and extinguish competing claims. These typically take several months and can delay a closing significantly.6Legal Information Institute. Quiet Title Action
Your purchase contract should include a timeline for the seller to deliver clear title. If defects surface that the seller cannot resolve before that deadline, you usually have the right to extend the deadline, accept the title as-is, or walk away. Do not waive your title review period under time pressure. It exists for exactly these situations.
What Your Policy Actually Protects
If you are financing the purchase, your lender will require you to buy a lender’s title insurance policy. That policy protects the lender’s investment, not yours.7Consumer Financial Protection Bureau. What Is Owners Title Insurance If a title defect surfaces after closing and the property’s value drops, the lender’s policy covers the outstanding loan balance. You lose your down payment and any equity you have built unless you also carry an owner’s policy.
An owner’s title insurance policy is optional but worth serious consideration. It protects your financial investment in the home if someone shows up with a valid claim from before you bought it.7Consumer Financial Protection Bureau. What Is Owners Title Insurance You pay a one-time premium at closing and the coverage lasts as long as you own the property. Who customarily pays for the owner’s policy varies by region; in some areas it is the seller, in others the buyer. Your agent or closing attorney can tell you what is standard locally.
After You Finish Reading
Read the entire report, not just the first page. Flag anything you do not understand, anything that does not match what the seller told you, and any easement or restriction that could interfere with your plans for the property. Then bring those flags to someone who can explain them.
The title company that prepared the report is your first stop for factual questions: what a particular recorded document says, when a lien was filed, whether a requirement has been satisfied. For questions about what the findings mean for your legal rights, a real estate attorney is worth the cost. An attorney can tell you whether an easement blocks your planned renovation, whether a cloud on title is likely to cause problems down the road, or whether a defect is serious enough to renegotiate the purchase price. A few hundred dollars for a consultation is inexpensive insurance against a problem that could cost tens of thousands to fix after closing.