After a buyer and seller have agreed on the terms of a purchase contract and have opened escrow, a Preliminary Title Report (“Prelim”) is one of the first documents to be sent out by the Escrow/Title Company. The report’s design is to paint a picture or a “preliminary” response to a Buyer’s request for title insurance on the property they are purchasing.
The report should contain the buyer and seller’s names, the legal description of the parcel of land involved, liens, easements, encroachments, and other encumbrances. It will also state the exceptions (items that will not be covered by the title policy to be issued.)
For example, if there are any known liens (an encumbrance on a property to secure a debt), those will be listed as exceptions. The seller’s mortgage is listed as a lien, as that will have to be paid in full in order for the property to transfer to the buyer. County property taxes are listed as a lien as well – since property taxes are paid in arrears in Arizona, there are typically outstanding taxes to be paid at close of escrow.
The good news is that there are many things a title insurance policy will cover:
- a forged deed or mortgage in the chain of title
- a deed or a mortgage signed by an under aged person
- a deed or a mortgage made by an incompetent person
- a deed or a mortgage made under a power of attorney that has expired
- a deed or a mortgage made by a person with the same name as the owner but not being the rightful owner
- a deed or mortgage procured by fraud or duress
- a federal estate tax lien due to title transfer by an heir
- a presumed dead person who appears and has interest in the property
- a judgment or levy that may be void or voidable due to a defect in the proceeding
- an undetected lien
- defect in recordation
- attorney’s fees and costs
While the escrow process is a series of steps that you have to wade through in the purchase of your new home, an experienced Realtor® can effortlessly guide you through the process and help you to protect your best interests. Remember to review the Preliminary Title Report with your Realtor to make sure you understand all the information being presented.
The Matheson Team is a group of real estate experts who specialize in the Scottsdale area. Contact us for more information on the home buying process.
Realtor | Founder
The Matheson Team – RE/MAX Fine Properties
21000 N. Pima Rd., #100, Scottsdale, AZ 85255
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