- — After the buyer and seller have reached agreement, but before the close of escrow, the preliminary title report needs review. It’s not going to be one of the most riveting documents you’ll ever read. But you should examine the preliminary title report closely, as it’s one of the most important documents a buyer will receive.
Among dozens of documents that serve to disclose to the buyer important knowledge about the property, the preliminary title report documents ownership, vesting and detail regarding anything that is recorded against the property. For a buyer, the title report will reveal various liens, encroachments, easements and anything else recorded against the property. The title company compiles the report from a search of county records in order to issue title insurance, and any liens against the property are listed as “exceptions” to title insurance.
Here are three important pieces of the title report you should review carefully.
1. The Legal Description
The legal description is everything you won’t see in any Realtor® marketing or advertising. It’s the literal description of where the property is located and the boundaries of the property in relation to the nearby streets and intersections. In the case of a condominium or planned unit development (PUD), the legal description will include the property’s interest in any common areas, exclusive or non-exclusive easements, and details on any parking or storage that conveys with the property.
Here’s an example of a legal description from a preliminary title report of a property:
“Beginning at a point on the Westerly line of Fifth Avenue, distant thereon 250 feet Southerly from the Southerly line of Balboa Street; running thence Southerly along the Westerly line of Fifth Avenue 25 feet; thence at a right angle Westerly 120 feet,” and so on.
Legalese? Absolutely. But it’s precise, and necessary.