For every loan and real estate sales transaction we use a Preliminary Title Report that we get from a Title Company. The title report will show liens, encumbrances, taxes, and the names of people who own the property as well as the property address. And there is a legal description of the property. The title report tells a lot about the property.

I am looking at a title report and on the first page I have the customers name and property address. On page two I see his name again but this time is shows ‘vesting’ and my customer shows name, an unmarried man. That means he owns this property by himself.

The next paragraph is a legal description from the county records …”All of Lot 57, as shown on that certain map….” and a parcel number. In my county the parcel number is an 8 digit number and property can be looked up by parcel number without an address.

Next are Taxes and assessments. I can look at the preliminary title report and see how much a customer has to pay in taxes each year and this payment is part of the calculation for the debt to income ratio.

The preliminary report I am looking at next shows a judgement. The customer was aware of this but said that an attorney had cleared the lien. Apparently the attorney has not cleared the lien as yet so I have to make sure this lien is cleared before we can lend or we must pay it in full.

Now I see two liens; a first mortgage recorded back in 2004 and a second mortgage also recorded in 2004. What determines whether a lien is in first or second position is the date of recording. Who ever records first has the priority position.

These are just some of the things we look for when we get the preliminary title report. This report is ordered as soon as there is a loan application because it has to be in proper order before we can do a loan or the loan must cure any issues.

The preliminary report is not discussed much but it is as important as the appraisal and credit report.