Page 9 - Hawaii Top Flyers

What should I look for when reading my Preliminary of terms and conditions of the offer to issue a title insurance
Report? policy, not a representation as to the condition of title.
A. You will be interested, primarily, in the extent of your These distinctions are important for the following reasons:
ownership rights. This means you will want to review the first, no contract or liability exists until the title insurance
ownership interest in the property you will be buying and the policy is issued; second, the title insurance policy is issued
description of the property, as well as any claims, restrictions to a particular insured person and others cannot claim the
or interests of other people involving the property. benefit of the policy.

The report will note in a statement of vesting the degree, Can I be protected against title risks prior to the close
quantity, nature and extent of the owner’s interest in the real of the real estate transaction?
property. The most common form of interest is “fee simple” or
“fee” which is the highest type of interest an owner can have Yes, you can. Title companies can protect your interest
in land. through the issuance of “binders” and “commitments.”

Liens, restrictions and interests of others which are being A binder is an agreement to issue insurance giving
excluded from coverage will be listed numerically as temporary coverage until such time as a formal policy
“exceptions” in the preliminary report. These may be claims is issued. A commitment is a title insurer’s contractual
by creditors who have liens or liens for payment of taxes or obligation to insure title to real property once its stated
assessments. There may also be recorded restrictions which requirements have been met.
have been placed in a prior deed or contained in what are Discuss with your title insurer the best means to protect your
termed CC&Rs--covenants, conditions and restrictions. interests.
Finally, interests of third parties are not uncommon and may
include easements given by a prior owner which limit your How do I go about clearing unwanted liens and
use of the property. When you buy property you may not encumbrances?
wish to have these claims or restrictions on your property.
Instead, you may want to clear the unwanted items prior to You will wish to carefully review the preliminary report.
purchase. Should the title to the property be clouded, you and your
agents will work with the seller and the seller’s agents to clear
In addition to the limitations noted above, a printed list the unwanted liens and encumbrances prior to taking title.
of standard exceptions and exclusions listing items not
covered by your title insurance policy may be attached as an Who can I turn to for further information regarding
exhibit item to your report. Unlike the numbered exclusions, Preliminary Reports?
which are specific to the property you are buying, these Your real estate agent and your attorney, should you choose
are standard exceptions and exclusions appearing in title to use one, will help explain the preliminary report to you.
insurance policies. The review of this section is important, Your escrow and title company can also be helpful sources.
as it sets forth matters which will not be covered under your
title insurance policy, but which you may wish to investigate, CONCLUSION: In a business which is directed at risk
such as governmental laws or regulations governing building elimination, the efforts leading to the production of the
and zoning. preliminary report, which is designed to facilitate the
issuance of a policy of title insurance, is perhaps the most
Will the Preliminary Report disclose the complete important function undertaken.
condition of the title to a property?
No. It is important to note that the preliminary report is not a
written representation as to the condition of title and may not
list all liens, defects, and encumbrances affecting title to the
land, but merely report the current ownership and matters Reprinted with the permission from the California Land Title Association
Updated: November 2019
that the title company will exclude from coverage if a title
insurance policy should later be issued. 09/2021 | © 2021 Old Republic Title | OR1996-DI | Old Republic Title
is providing this information as a free customer service and makes no
warranties or representations as to its accuracy.
Is a Preliminary Report the same thing as title
insurance? Old Republic Title strongly recommends that consumers confer with their
title insurer as underwriting requirements vary among companies and
Definitely not. A preliminary report is an offer to insure, it is further, obtain guidance and advice from qualified professionals, including
not a report of a complete history of recorded documents attorneys specializing in Real Property, Trusts and/or Title Insurance to
relating to the property. A preliminary report is a statement get more detailed, and current, information as to any particular situation
affecting them.