A preliminary title report is a document a title company produces early in escrow that describes the property’s legal status and lists every recorded claim, lien, easement, or restriction the insurer intends to exclude from coverage. It is best understood as an offer to issue title insurance on specific terms, not a certification that the title is clean. For the buyer, it is also a deadline-driven checklist: anything on it that you don’t object to, you accept.
What the Report Actually Contains
The report opens with a legal description of the property, usually a metes-and-bounds or lot-and-block reference that fixes the exact boundaries. It then states the current vesting, meaning how the present owner holds title — sole owner, joint tenants, community property, or another form. Vesting controls who has authority to sign the deed, so it matters at signing time even when it looks like a technicality.
Property tax status comes next. The report shows whether assessments are current and whether any special tax district has an outstanding balance. Unpaid property taxes create a lien that outranks almost every other claim, which is why lenders read this section closely before funding.
After that comes the heart of the report: the exceptions. These are the recorded items the title insurance policy will not cover. Common examples include utility easements, covenants, conditions, and restrictions (CC&Rs) that limit how the property can be used, and recorded liens or deeds of trust representing debts secured by the property. The exceptions tell you what burdens travel with the property and what the seller may have to resolve before you close.
Standard Exceptions Versus Property-Specific Ones
Most reports also carry a block of boilerplate exceptions the title company excludes on nearly every deal. Knowing which items are routine helps you spot the ones that aren’t.
- Survey matters: encroachments, boundary overlaps, or setback violations that only a physical survey of the ground would reveal. The company is working from recorded documents, not measurements.
- Rights of parties in possession: claims by tenants, squatters, or anyone occupying the property under an unrecorded lease or agreement.
- Unrecorded mechanic’s liens: potential claims from contractors or suppliers who furnished labor or materials but haven’t yet filed in the public record.
- Taxes not yet due: current or upcoming property tax assessments that haven’t posted as liens.
Some of these can be narrowed or removed. A buyer who orders a current survey, for instance, can ask the title company to delete the survey exception and insure based on the actual survey results. Negotiating down the standard exceptions is one of the more overlooked moves in a residential transaction.
Why the Report Isn’t a Guarantee
This is where buyers most often misread the document. A preliminary report is an offer to insure, not a representation that the title is good. The title company is defining the risk it’s willing to take and the terms under which it will issue a policy. No contract or liability attaches until the actual policy is issued after closing.
A full abstract of title is different: it is a written account of every recorded document in the chain, and a company that prepares one can be liable for items it missed. A preliminary report carries no equivalent obligation. If the report fails to list a recorded lien, your recourse is through the title insurance policy once it’s issued, not through the preliminary report itself.
The flip side is worth stating plainly. An item that doesn’t appear as an exception isn’t necessarily nonexistent. It means the insurer is prepared to cover a claim arising from it, not that the underlying problem has been investigated and ruled out.
How to Review the Exceptions
The report typically arrives within one to two weeks of opening escrow, and the purchase agreement usually sets a deadline for the buyer to review and object. Missing that window generally means accepting every exception the report lists, so this is an active step rather than paperwork to file away.
Sort the list before you react to it. Utility easements along the property line are normal. CC&Rs in a planned subdivision are expected. The items that deserve attention are the specific ones: a recorded lien from an unpaid contractor, an easement cutting across the part of the yard where you planned to build, an old deed of trust that was never formally released, or a vesting problem suggesting someone else may have a claim.
Judgment of which exceptions are tolerable is yours, not the title company’s. The company is a neutral party. Whether a particular restriction or easement is a dealbreaker depends on what you intend to do with the property, which only you and your agent or attorney can weigh.
Your Options When You Object
For exceptions you aren’t willing to accept, a few responses are standard.
- Ask the seller to clear it before closing. Unpaid liens, unreleased mortgages, and judgment liens generally fall here, because the seller is typically obligated to deliver clear title.
- Request a title endorsement. An endorsement amends the policy to cover a specific exception. If the report flags CC&Rs, an endorsement can protect you against losses if those restrictions are enforced in a way that damages your property’s value. Endorsements are available for encroachments, mineral rights, zoning, and access, and each adds a small premium.
- Negotiate the price. If an encumbrance can’t be removed but reduces value or usefulness, a credit or price reduction can account for it.
- Cancel. Most purchase agreements let the buyer walk away during the title review period if the problems are serious and the seller can’t or won’t fix them.
How Problems Get Cleared Before Closing
Once objections are made, the title company coordinates the cleanup. The most routine task is requesting a payoff demand from the seller’s existing lender so the exact amount needed to release the current mortgage is known. At closing, the seller’s proceeds satisfy that debt and a release or reconveyance is recorded, removing the old lender’s claim from the public record.
Judgment liens follow a similar pattern. If a court judgment has attached because the seller lost a lawsuit, the creditor is paid from closing proceeds or the seller provides proof that the judgment was already satisfied. The company won’t close until a satisfaction of judgment is recorded.
Mechanic’s liens require either full payment and a recorded release from the claimant, or in some cases a surety bond deposited to guarantee payment while a dispute is resolved. The title company often holds back a portion of the seller’s funds in escrow until the release is recorded.
Ownership gaps and vesting errors sometimes surface during the search. If a prior owner’s spouse never signed a deed, or an heir was omitted from a probate transfer, the company may arrange for a quitclaim deed under which the person with the potential claim formally relinquishes it. More serious gaps may require a quiet title action through the courts, which can delay closing by months.
How the Underlying Search Is Done
To build the report, title examiners search databases called title plants, which are proprietary repositories of indexed property records that allow faster retrieval than pulling original documents from the courthouse. Examiners trace every recorded transaction involving the parcel to establish the chain of title: the chronological record of ownership transfers from the original land grant to the present.
The search goes beyond deeds. Examiners check court records for judgments or pending lawsuits that could attach to the property. They review probate files to confirm that a deceased owner’s property was legally transferred to the heirs. They look for what the industry calls wild deeds, recorded documents that cannot be connected to the chain of title because a prior link was never properly recorded. A wild deed signals that someone may hold a claim the record doesn’t clearly show, and resolving it usually requires a corrective document or a quiet title action.
County recorder offices still factor in. Even with digital title plants, examiners cross-reference original recorded documents to catch anything the indexing may have missed. The goal is to surface every recorded interest that could affect the buyer’s rights, so nothing surprises the parties after the sale closes.
What to Do With the Report When You Get It
Read the report the day it arrives. Confirm the legal description matches the property you believe you are buying. Confirm the vesting names the seller you are dealing with. Walk through the exceptions one by one and separate the standard items from the specific ones. For each specific item, decide whether you want it removed, insured around by endorsement, discounted in the price, or whether you can live with it as written. Then put your objections in writing to the seller before the deadline in your purchase agreement runs out.
Everything the report does for you depends on that review happening on time. The document is only as useful as the response it prompts.