Reading a preliminary title report means working through it in the order the title company wrote it: Schedule A tells you what property and whose ownership the report describes, Schedule B Part I lists what has to be cleared before a policy will issue, and Schedule B Part II lists what the policy still won’t cover once it does. Learning how to read a preliminary title report is mostly a matter of knowing which section answers which question, and which exceptions are worth pushing back on before closing.
A preliminary title report, often called a “prelim,” is produced after a title company searches public records for deeds, mortgages, tax records, court judgments, and anything else recorded against the property. It is a proposal to insure, not a guarantee of clear title: here is what we found, here is what you need to fix, here is what we will not cover. If your lender asks for a “title commitment” instead, that is the binding version of the same information.1Stewart. Title Tenets Recap: Understanding Preliminary Title Reports, Commitments, and Proformas
Schedule A: Confirm the Basics Before Anything Else
Schedule A is short, factual, and the foundation for everything that follows. Four items deserve a careful look.
The effective date is the date and time through which public records were searched. Anything recorded after that date will not appear. In practice the title company runs a final search before closing, but you want to know what window the report itself covers.2WFG National Title Insurance Company. How to Read a Preliminary Report
The legal description defines the property’s exact boundaries, usually by lot and block, metes and bounds, or government survey. Compare it against your purchase agreement and any survey you have ordered. Mismatches are rare but serious.
The vesting names the current owner and describes how they hold title. The names should match whoever signed the purchase agreement. If the seller is listed alone but holds the property in joint tenancy with a spouse, that spouse likely needs to sign off on the sale.
The proposed coverage amount is the dollar figure the title company would insure, usually equal to the purchase price for an owner’s policy or the loan amount for a lender’s policy.
Why the Vesting Line Matters
Vesting is not just a list of names. It describes how ownership is structured, which affects how the property transfers, how it is inherited, and sometimes who has to consent to a sale. The forms you are most likely to see:
- Sole ownership, where one person holds full title.
- Joint tenancy with right of survivorship, where co-owners share equal interests and a deceased owner’s share passes automatically to the survivors without probate.
- Tenancy in common, where co-owners each hold a separate share, possibly of different sizes, and each share passes through its owner’s estate.
- Community property, used in roughly a dozen states for property acquired by married couples or registered domestic partners during the marriage.
- Trust ownership, where a trustee holds the property for the trust’s beneficiaries.
If the vesting on the report does not match how you plan to take title, raise it now. Fixing it after closing means recording a new deed, which costs money and time.
Schedule B, Part I: What Must Be Done Before the Policy Issues
Schedule B, Part I is a checklist of conditions. Until every item is satisfied, there is no policy.3Cypress Title. Reading and Understanding Preliminary Reports Typical requirements include paying the purchase price, properly executing and recording the new deed, paying off existing mortgages and recording their releases, and clearing any outstanding tax liens or judgments against the current owner.4First Midwest Ag. ALTA Commitment for Title Insurance – Schedule B Part I You may also see requirements to record a power of attorney, provide a death certificate for a deceased joint tenant, or produce a corporate resolution authorizing a sale.
Work through this list with your escrow officer or attorney well before closing. Something as routine as obtaining a lien release from a lender that was paid off long ago can take weeks of back-and-forth.
Schedule B, Part II: What the Policy Still Won’t Cover
Part II is where most buyers need to slow down. These are the exceptions, the matters the policy will not insure against even after you buy it. If a problem falls under one of these, you are on your own.
Exceptions come in two forms. Standard exceptions apply to almost every policy unless you take steps to remove them: rights of parties in possession, unrecorded easements, boundary issues a survey would reveal, mechanics’ liens not yet in public records, and taxes or assessments not yet showing as recorded liens.5First Midwest Ag. ALTA Commitment for Title Insurance – Schedule B Part II Special exceptions are specific to the property: a recorded utility easement, the subdivision’s CC&Rs, an existing lien that will stay in place. Some standard exceptions can be removed with extended coverage; special exceptions tied to recorded documents usually remain on the policy permanently.
Easements
An easement gives someone else the right to use part of your property for a specific purpose. Utility easements let power, water, or cable companies reach their infrastructure. Access easements let a neighbor cross your land. Drainage easements reserve space for stormwater.
Most are harmless in practice. One that cuts through a buildable area, though, can kill a renovation plan. When an easement appears, ask the title company for a copy of the recorded document so you can see the exact location and terms, and compare it against a survey if you have one.
CC&Rs
Covenants, conditions, and restrictions are rules recorded against the property, most common in planned communities, condominiums, and subdivisions. They can govern architectural style, fence height, paint colors, landscaping, rentals, and home-based businesses. They run with the land and bind every future owner.
Violations can bring fines or lawsuits from the HOA or sometimes individual neighbors. Get a full copy and read it before closing. Restrictions on short-term rentals or pets are among the most common sources of post-closing frustration, and they rarely come up during showings.
Liens
A lien is a financial claim against the property. The kinds you are most likely to see:
- Mortgage liens from the seller’s existing loan, which must be paid off and released at or before closing.
- Tax liens for unpaid property taxes, income taxes, or special assessments. These generally take priority over most other claims.
- Judgment liens, placed after a court awards money to a creditor; they attach to all real property the debtor owns in the recording county.
- HOA liens filed when the owner falls behind on dues or special assessments.
- Mechanics’ liens filed by contractors, subcontractors, or suppliers who worked on the property and were not paid. A mechanics’ lien attaches to the property itself and follows the land after a sale, which is why catching them before closing matters.6Legal Information Institute. Mechanics Lien
Every lien has to be paid, released, or negotiated before a clean policy will issue. If a lien looks like it does not belong to the current owner, ask the title company to verify it. Common names produce false hits.
Encroachments
An encroachment is a structure from one property that crosses the boundary onto another: a fence two feet over the line, a garage eave overhanging the neighbor, a shared driveway drifting off center. These usually surface when a survey is compared against the legal description.
Minor encroachments such as eaves or hedges are often acceptable to lenders as minor title impediments within set limits.7Fannie Mae. Title Exceptions and Impediments Larger ones may require a boundary line agreement, removal of the encroaching structure, or a recorded easement. If the report flags one, order a survey so you can see exactly what crosses where.
Standard vs. Extended Coverage
A standard owner’s policy covers defects discoverable through public records: forged deeds, recording errors, undisclosed heirs, and similar problems. It does not cover what only a physical inspection or survey would reveal.
An extended policy, often issued on the ALTA Homeowner’s Policy form, adds coverage for parties in possession not shown in public records, unrecorded easements, encroachments and boundary overlaps a survey would disclose, mechanics’ liens not yet filed, and taxes or assessments not yet recorded. It also picks up several risks that arise after the policy date, including forgery affecting title and someone filing an unauthorized lease against the property. Some versions include an automatic coverage increase up to 150% of the original amount over five years.8Stewart. ALTA Policy Comparison
To qualify for extended coverage you generally need to provide a current survey and sign an affidavit at closing confirming you know of no unrecorded liens or adverse matters.9Land Title Guarantee Company. Protecting Your Property: Owners Extended Coverage The premium is higher, but for most residential buyers the extra protection is worth it, especially if you plan renovations where boundary lines and easement locations will matter.
Owner’s Policy vs. Lender’s Policy
If you are financing, the lender will require a lender’s policy. That policy protects the lender’s interest, covers only the loan amount, and shrinks as you pay down the mortgage. It does nothing for you. An owner’s policy is separate, optional, and protects your equity for as long as you or your heirs own the property. Who pays depends on local custom and the purchase agreement. If a title defect surfaces years after closing without an owner’s policy in place, the lender’s policy covers the bank and you cover your own attorney.
What to Do When You Spot a Problem
Most purchase contracts include a title contingency giving you a window, often five to fifteen days depending on the contract, to review the report and raise objections. Miss the window and you may have accepted the title as-is.
Read Schedule B, Part II line by line. For each exception, ask whether you can live with it permanently, because most recorded exceptions stay on the policy. Request copies of any recorded documents you do not understand, including the actual easement agreement or the full CC&Rs. Your agent or attorney can help translate, but reading the source documents yourself is worth the time.
If an exception is a dealbreaker, you usually have three options: ask the seller to resolve it before closing by paying off a lien or obtaining a release, negotiate a price reduction to account for the limitation, or exercise your title contingency and walk away. How willing the seller is to fix things often tracks how motivated they are and how close you are to closing.
When the Defect Is More Serious
Some problems cannot be cleared with a payoff and release. A break in the chain of title, meaning a gap or unexplained transfer in the historical ownership record, may require a quiet title action, a lawsuit filed to establish legal ownership and eliminate competing claims. Quiet title cases can involve adverse possession disputes, missing heirs, old unreleased liens from defunct lenders, or ambiguous quitclaim deeds. They are expensive and slow, and they kill deals. If the report reveals a chain-of-title issue, talk to a real estate attorney before committing further.
Costs and Timing
A title search for a residential property generally runs between $75 and $300, depending on location and the complexity of the ownership history. The title insurance premium is separate and scales with the property value and local rates, from a few hundred to a few thousand dollars. Recording fees for new deeds and mortgage releases vary by jurisdiction.
From the time a title order is placed, expect the preliminary report within a few days to two weeks. Straightforward ownership in a county with good digital records comes back faster. Older properties, those that have changed hands many times, or those in rural counties with less-digitized records take longer. If your closing is tight, confirm the turnaround with the title company early.