Why you need a title report
You want to have a solid understanding of the property you are buying. Title reports outline important information related to the property like current ownership, parcel maps, and possible issues related to ownership.
Quick tip: As a buyer, you should always read and understand the title report pertaining to the property at hand. If you have questions after reading your report, it is important to consult your realtor and the title officer who procured the title report.
Three sections exist in a title report:
- Schedule a
- Schedule b
- Schedule c
Title reports also allow title companies to issue a title insurance policy protecting you and your mortgage lender from any loss that may arise from title-related issues over the course of you owning the property.
At the request of a realtor, a title officer will open escrow and will perform a title search. They will then deliver a current title report on the property at hand to all parties involved in the transaction.
In order for the report to be issued, the title officer will research the following in detail:
- Property deeds filed with the county
- County assessment records
- Open and closed mortgages
- County land records
- Divorce cases and settlements
- Bankruptcy court records
- Tax lien records
- Street and sewer assessments
- Recorded and non-recorded land surveys
- Court filings
- Tax search
Let’s talk about the three sections in a title report…
This section details the scope of the search and the type of title insurance policy that will be issued based on the title reports findings. This portion of the report will also outline the names of current owners and the type of land interest at hand.
Schedule B outlines any encumbrances and exceptions that affect a property. An encumbrance can be a lien, claim, interest, or liability that is connected to a property.
Not every encumbrance prevents the transfer of title. In some instances, an encumbrance may bind current and future owners and cannot be removed. An encumbrance that would not prevent a transfer would be along the lines of an easement, cc&r’s, water and mineral rights, and property setbacks.
An encumbrance that would need to be cleared prior to transferring title would be any mortgage interest, liens or judgments attached to the property.
This section of the title report outlines the legal description of the property you are buying.
Many times I have been shocked by realtors that don’t understand the importance of reading through and understanding title reports. Unfortunately, many brokers fail to educate agents on the importance of understanding how to read title, chain of ownership, parcel maps, etc… A title report is not something to be overlooked and realtors and their clients should both have a clear understanding of what’s included in the title report.
After years of representing clients as a realtor, my own family as a developer, and acquiring properties at trustee sales, I have a solid understanding of how to read titles. I’ve backed out of multiple land and home deals after finding what was being marketed by a listing agent was actually not what was for sale per the legal description. This happens more often than you would think so it’s important to have the right representation that crosses all the eyes and t’s.
I created a short video about title reports for social media. You can also view it by clicking the below link:
Torben Yjord-Jackson – Realtor
EXP Realty of CA, Inc.