A preliminary title report is a 20-to-40-page document issued by a title company after searching every public record attached to a property. It tells you who legally owns the home, what liens are recorded against it, what easements run across it, and what restrictions limit what you can do with it.
The report is issued during the inspection contingency period, when the buyer still has the right to cancel the contract if the title search reveals something unacceptable. Understanding what a preliminary title report is means understanding that every page after the first five — the Schedule B exceptions — is a list of reasons the property might not be yours to buy, or might not be usable once you own it.
A survey by the American Land Title Association found that approximately 25% of residential title searches uncover an issue that must be resolved before closing. Most are routine: an old mortgage that was paid off but never formally released, a tax lien from a bill the seller forgot about.
Some are not routine: a forged deed from two owners ago, a missing heir with a legal claim to the property, a mechanic’s lien from a contractor the seller refused to pay. The preliminary title report is the document that surfaces these issues before your money is gone.
What the Report Contains
The report opens with the legal description of the property. This is not the street address. It is the survey-based description recorded in the county records — metes and bounds, lot and block, or section and township , and it is legally binding.
The report also identifies the current record owner. If the person selling the home is not the person or entity listed as the record owner, they cannot convey valid title. This happens more often than it should: an inherited property where the estate was never probated, a divorce where the ex-spouse’s name was never removed from the deed, a trust where the trustee lacks authority to sell.
Schedule A lists the requirements for issuing the title insurance policy. These are the documents that must be executed and recorded at closing: the deed transferring ownership, the mortgage securing the buyer’s loan, an affidavit of title from the seller swearing no new liens have attached, and any releases or satisfactions needed to clear existing title issues.
Schedule B is the section where problems appear. It lists every exception to the title insurance coverage , every easement, lien, judgment, covenant, restriction, and encumbrance that affects the property. An item on Schedule B is a legal right held by someone other than the buyer over the property being purchased.
Common Problems Found in Preliminary Reports
Mechanic’s liens are the most disruptive finding in a residential transaction. A contractor, subcontractor, or material supplier who was not paid for work on the property can file a lien that attaches to the real estate. The lien follows the property, not the person who failed to pay.
The buyer inherits it at closing. Resolving a mechanic’s lien requires the seller to pay the contractor or post a bond to discharge the lien, obtain a recorded release, and provide it to the title company before closing. If the seller lacks the funds or refuses, the transaction dies.
Unreleased deeds of trust appear on roughly one in ten preliminary reports according to industry data. A previous mortgage was paid off years ago, but the lender never recorded a satisfaction or release. The title still shows an open lien.
The current owner may not know it exists because they received a payoff letter and assumed the matter was closed. The title company will not insure the transaction until a recorded satisfaction is in hand. Tracking down a lender that merged, failed, or sold its servicing rights to obtain a satisfaction can take weeks.
Judgment liens attach to any real property the judgment debtor owns in the county where the judgment is recorded. A seller who lost a credit card lawsuit, a divorce proceeding, or a business dispute may have a judgment lien on their property that they forgot about entirely.
Judgment liens survive the sale of the property unless they are paid or otherwise discharged. A $3,000 judgment lien from a collection lawsuit ten years ago can block a $500,000 home sale.
Easements and restrictive covenants are permanent. A utility easement along the rear property line prevents building anything permanent in that zone. A driveway easement allows a neighbor to cross the property to access their home.
A conservation easement held by a land trust may prohibit subdivision, development, or even tree removal. Historic district restrictions may dictate exterior paint colors, window styles, and fence types. None of these expire when the property changes hands. The preliminary report is the buyer’s only notice of their existence if the seller did not disclose them.
| Finding | What It Means | Resolution | Closable? |
|---|---|---|---|
| Mechanic’s Lien | Contractor unpaid for work on property | Seller pays contractor, records lien release | No |
| Unreleased Deed of Trust | Old mortgage paid but not formally released | Obtain and record satisfaction from lender | No |
| Judgment Lien | Old lawsuit judgment against seller | Pay judgment or negotiate settlement | No |
| Utility Easement | Utility company has access rights | Usually no action unless building planned | Yes |
| Restrictive Covenant | Limits property use | Review with attorney | Yes |
How to Review the Report
Read Schedule B first. Schedule A is procedural. Schedule B is the list of issues that will affect your ownership. For each item, ask whether it restricts how you can use the property, imposes a financial obligation, or grants a right to someone else to enter or use the land. An easement for a buried utility line along the rear fence is usually irrelevant. An easement for a neighbor’s driveway across your front yard is not. A covenant limiting the property to single-family residential use is standard in most subdivisions and not a concern unless you planned to build an accessory dwelling unit. A covenant prohibiting short-term rentals may be a deal-killer if you intended to use the property as a vacation rental.
An attorney should review the report. Title companies issue preliminary reports. Title companies do not represent the buyer. The title company’s interests align with the transaction closing cleanly and the policy being issued without claims.
An attorney’s interests align with the client. The attorney reads Schedule B and translates it from legal language into a practical assessment of risk. An attorney costs $800 to $1,500 to review title and handle closing. A title defect lawsuit costs $25,000 to $75,000. The value proposition is straightforward.
The Difference Between a Preliminary Report and Title Insurance
The report identifies problems. The insurance policy pays if a covered problem causes a loss after closing. A problem listed on Schedule B is excluded from coverage unless resolved before closing. A problem that should have been discovered by the title search but was missed may be covered, depending on the policy.
An owner’s policy protects the buyer’s equity for as long as they or their heirs own the property. A lender’s policy protects the mortgage lender and is required by every institutional lender. The buyer pays for the lender’s policy. The seller typically pays for the owner’s policy in most localities, though this is negotiable in the contract.
Frequently Asked Questions
How long does a preliminary title report take?
A standard residential report takes five to ten business days from the date the title company is engaged. The search involves reviewing county recorder records, tax assessor records, and court records. Properties in counties with digitized records process faster. Properties with long chains of title, properties in rural counties without digitized records, and properties involved in probate or trust administration may take two to three weeks.
Who pays for the preliminary title report?
The cost of the search and report is included in the title insurance premium paid at closing. Whether the buyer or seller pays the owner’s title policy premium depends on local custom and the purchase contract. In many areas, the seller pays for the owner’s policy and the buyer pays for the lender’s policy. The specific allocation is a negotiable term of the contract.
What happens if the report finds a problem?
The seller must resolve it. The standard purchase contract requires the seller to deliver marketable title at closing.
If a lien, judgment, or other defect appears on the report, the seller must pay it, release it, or otherwise cure it before the transaction can close. If the seller cannot or will not, the buyer may cancel the contract and recover the earnest money deposit, or may negotiate a price reduction to account for the cost of resolving the issue after closing.
Can I waive the preliminary title report?
No. The report is required for the title insurance policy, and every mortgage lender requires a lender’s title policy. You can choose not to purchase an owner’s policy, but doing so means you have no insurance if a title defect surfaces after closing. The one-time premium for an owner’s policy is a fraction of the cost of litigating a single title defect.
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