What Is a Preliminary Title Report in California?
A preliminary title report (also called a “prelim”) is a document issued by a title company after escrow opens. It shows:
Who legally owns the property
The current vesting (how title is held)
Liens recorded against the property
Easements affecting the property
CC&Rs (covenants, conditions & restrictions)
Items that will NOT be covered by title insurance
It is not a title insurance policy. It is an offer to insure under certain conditions.
As explained in the California Title Company guide Preliminary-Reports, the preliminary report lists ownership and recorded matters that will be excluded from coverage unless cleared before closing.
How to Read a Preliminary Title Report
Here’s what experienced agents and attorneys look at first:
1. Statement of Vesting
This confirms:
Who owns the property
How they hold title (fee simple, joint tenancy, trust, etc.)
“Fee simple” is the highest form of ownership.
If the seller’s name does not match the purchase contract, that’s a red flag.
2. Legal Description
Not the street address — the actual legal parcel description.
This is what legally transfers at closing.
3. Exceptions
The prelim lists recorded items called “exceptions.”
These are items the title company will NOT insure over unless resolved.
Common exceptions include:
Deeds of trust (mortgages)
Tax liens
Judgment liens
HOA liens
Mechanic’s liens
Easements
CC&Rs
Encroachments
These remain attached to the property unless cleared.
What Are Title Exceptions?
A title exception is something recorded against the property that limits ownership rights.
Examples:
• An easement allowing a neighbor access
• Utility company access rights
• HOA restrictions
• Recorded building restrictions
• Unpaid liens
If you do not remove them before closing, they stay with the property.
What Should Buyers Be Concerned About?
Here’s what experienced buyers pay close attention to:
✔ Unknown liens
✔ IRS or state tax liens
✔ HOA disputes
✔ Encroachments
✔ Access easements
✔ CC&Rs limiting rental use
✔ Unreleased prior loans
If you’re buying multifamily, probate, or trust property, this review becomes even more critical.
Is a Preliminary Title Report Legally Binding in California?
Short answer: No.
A preliminary title report (often called a “prelim”) is not a contract and not a guarantee of clear title. It is simply a report issued by the title company showing the conditions under which it is willing to issue title insurance.
It lists:
Current ownership (vesting)
Recorded liens
Easements
CC&Rs
Items that will be excluded from coverage
The prelim is essentially an offer to insure, not the insurance itself.
Why It Is Not Legally Binding
The preliminary report does not create enforceable rights on its own.
Your legal protection comes from:
The purchase agreement
The final title insurance policy issued at closing
If there is a title issue after closing, you rely on the title insurance policy, not the preliminary report.
Why It Still Matters
Even though it’s not legally binding, the prelim is extremely important because:
It shows what you are taking title subject to
It reveals liens or claims that must be cleared
It identifies restrictions that affect your use of the property
It helps buyers decide whether to move forward
It drives negotiations and contingency removals, but it is not itself a guarantee.
Should I Worry About Easements on the Preliminary Title Report
Yes, review every easement listed on a preliminary title report in Los Angeles, but don’t panic. Most are routine. The issue is impact, not existence.
Common and Usually Harmless
Utility easements (power, sewer, water, gas) are standard.
Often located along rear or side lot lines.
Typically underground and rarely interfere with normal use.
These are expected and usually priced into the market.
When to Look Closer
Access / ingress-egress easements allowing a neighbor to cross your land.
Driveway or shared access rights affecting privacy or parking.
Building restrictions, view, or conservation easements limiting additions, ADUs, pools, or expansions.
If the easement runs through prime buildable area, it can restrict future improvements and affect value.
Practical Risk Questions
Where exactly is it located on the lot?
Who benefits from it?
Is it exclusive or shared?
Does it limit construction?
Does it conflict with your plans (ADU, expansion, gate, driveway change)?
Before Closing
Have the actual recorded document reviewed — not just the summary on the prelim. Confirm it does not interfere with zoning, setbacks, or development plans.
In Los Angeles, many easements are routine infrastructure. The concern arises when they materially limit access, privacy, or buildability.
Is a Preliminary Report the Same as Title Insurance?
No.
This is one of the most misunderstood topics.
A preliminary report:
Is NOT a guarantee
Is NOT a policy
Does NOT provide coverage
Is an offer to insure under certain conditions
Title insurance is issued after closing, once all required conditions are satisfied.
As clarified in the document Preliminary-Reports, the prelim outlines the conditions under which a policy will be issued.
Does a Preliminary Report Show Everything?
No.
It does not guarantee a completely clean title history.
It shows:
Current ownership
Recorded matters affecting title
Items excluded from coverage
It may not list every possible defect.
What Happens if There’s a Lien on the Title
If a lien shows up on the preliminary title report, someone has a legal claim against the property for unpaid debt. It must be resolved before closing, or you risk taking title subject to it.
Liens can include:
Mortgages
Property tax liens
HOA liens
Judgment liens
Mechanics’ liens (contractors)
They attach to the property, not just the person.
What Usually Happens
In a normal sale, escrow pays off the seller’s liens from their proceeds. The title company will not issue clear title unless required liens are removed or specifically listed as exceptions. Unresolved liens can delay or stop closing.
If a lien remains as an exception on your title policy:
You likely have no title insurance protection.
The debt may become your responsibility.
It can affect resale, refinancing, or even lead to foreclosure in serious cases.
What To Do
Ask escrow or title which liens are listed and their payoff amounts.
Confirm whether they are scheduled to be cleared at closing.
If unclear or substantial, have your agent and possibly a California real estate attorney review the documents.
If the lien will remain, reassess price or reconsider the deal.
How to Clear Liens Before Closing
If something objectionable appears:
Buyer raises objection
Escrow works with seller
Seller clears or pays off liens
Title company updates report
Policy is issued at closing
This is why reviewing the prelim early in escrow is essential.
What Is an Unrecorded Easement?
An unrecorded easement is someone’s legal right to use part of your property that was never officially recorded with the county.
How It Happens
It can arise from:
Long-term use (prescriptive rights)
Necessity (access to a landlocked lot)
Verbal or informal agreements
Implied use based on prior ownership
Because it was never recorded, it won’t appear on a standard preliminary title report.
Why It Is Important
A neighbor could later claim the right to use a driveway, pathway, or utility line.
Standard title insurance often excludes unrecorded matters unless you obtain extended coverage.
It can lead to disputes, reduced property value, or delays in a sale.
How to Protect Yourself
Order a professional survey.
Physically inspect for visible paths, driveways, or utility lines crossing boundaries.
Ask the seller about informal arrangements.
Consider title endorsements that cover off-record risks.
In short: it’s a hidden use right that doesn’t show up in public records—but can still affect ownership.
What Happens If the Seller Can’t Clear Title?
If the seller cannot resolve liens, easements, or other title defects before closing, they cannot deliver marketable title as required under standard California purchase contracts.
Escrow is canceled
Buyer receives full deposit (earnest money) back
No penalty to the buyer
If the seller cannot perform despite good-faith efforts, the buyer has the right to cancel and recover their deposit. Clean title is not optional; it’s required to close.
What If Vesting Is Wrong on the Preliminary Title Report?
If vesting is incorrect (for example, wrong marital status, trust name, or prior owner listed), it means the public record does not match the seller’s current legal ownership.
Why This Happens
The prelim pulls from county records. Errors often occur after:
Death
Divorce
Transfers into or out of a trust
Entity changes
It’s not automatically fatal — but it must be corrected before closing.
What Happens Next
Escrow and title will require proof (affidavits, death certificates, trust documents, corrective deeds).
The issue must be fixed before recording the new deed.
If not corrected:
Closing is delayed
Lender may refuse funding
Title company will not insure
What You Should Do
Notify escrow immediately
Review Schedule A carefully
Ensure vesting matches the purchase contract
Most vesting issues are routine and fixable — but they must be resolved to deliver marketable title.
Can a Preliminary Title Report Miss Something?
Yes. A preliminary report is based on a public records search, and it is not foolproof.
What It May Miss
Clerical errors (misspelled names, recording mistakes)
Unrecorded issues (prescriptive easements, boundary disputes, verbal agreements)
New liens recorded after the report date (title runs a “date-down” before closing)
Important
A prelim is not insurance. The final title policy provides coverage, except for items listed as exclusions or exceptions.
How to Protect Yourself
Review Schedule B carefully
Consider extended/ALTA coverage
Order a survey if boundaries matter
Verify taxes and HOA status
Never rely solely on the prelim. Flag concerns to escrow immediately so they can update and correct before closing.
How long does a Preliminary Title Report take in California?
Typically 3–7 business days after escrow opens and the title company receives the order. In more complex cases, it can take up to 2 weeks.
When is it ordered?
Many listing agents order it before going live (or before taking the listing) to review liens, easements, trusts, vesting, unpaid taxes, or other title issues in advance.
Others wait until escrow opens, which is also standard practice.
When is a preliminary title report ordered?
Best practice: order it as soon as you have a serious seller so you can identify and resolve any title issues early.
Schedule A vs. Schedule B – Preliminary Title Report (California)
Schedule A = Basic Facts
Shows the core transaction details:
Current owner (vesting)
Buyer (proposed insured)
Legal description
Sales price
Policy amount
Check this for accuracy (names, vesting, property description).
Schedule B = Conditions & Exceptions
B-1 (Requirements) – What must be done before closing:
Pay off seller’s loan
Record grant deed
Clear liens
Provide required documents
B-2 (Exceptions) – What title insurance will NOT cover:
Easements
CC&Rs (HOA rules)
Property taxes
Recorded restrictions
Review B-2 carefully; these are items you take the property subject to.
In short:
Schedule A = Who/what/price.
Schedule B-1 = To-do list.
Schedule B-2 = Not covered.
Clarification: Title insurance protects against defects not listed in B-2, but anything disclosed in B-2 remains your responsibility unless it is removed or specifically insured over before closing.
What does “cloud on title” mean?
A cloud on title is any recorded issue that creates doubt about clear ownership of a property and can interfere with a sale, refinance, or transfer.
Typical Causes
Unpaid tax, judgment, or mechanic’s liens
Pending lawsuits (lis pendens)
Unreleased mortgages
Errors, forged deeds, or recording mistakes
How It Appears in a Title Report
Clouds usually show up in Schedule B as exceptions or requirements that must be resolved before closing.
Why It Matters
Title companies will not insure over significant defects. The issue must be cleared—through payoff, correction, quitclaim, or court action—to deliver marketable title and avoid escrow delays or future liability.
What is a mechanic’s lien?
A mechanic’s lien is when a contractor, subcontractor, or material supplier records a legal claim against your property because they were not paid for work or materials.
Example in plain English:
You remodel your kitchen. The contractor finishes the job. You don’t pay the final bill. The contractor can record a mechanic’s lien against your property. That lien becomes a cloud on title until it’s resolved.
It does not mean they own your house.
It means they have a legal claim tied to the property for the unpaid amount.
Can anyone put a cloud on title?
Not exactly.
Someone cannot just randomly “put a cloud” on your title because they’re angry. There must be a document that is legally recorded with the county.
However:
A contractor can record a mechanic’s lien.
A creditor with a court judgment can record a judgment lien.
Someone involved in a lawsuit over the property can record a lis pendens.
Clerical errors can also create title problems.
So while not “anyone” can do it casually, certain people can record claims — and sometimes those claims are disputed or even improper.
What if someone is being spiteful and puts a lien on the title?
If a lien is improper, exaggerated, or fraudulent:
You can challenge it.
You can demand it be released.
In serious cases, you can file a lawsuit to remove it (quiet title action).
In California, improper mechanic’s liens can expose the person who filed it to penalties.
Recording a false lien is not risk-free. There are legal consequences.
Even if the claim is wrong, once it’s recorded:
It shows up in a title search.
Buyers get nervous.
Lenders may refuse to fund.
Escrow can stall.
That’s why it becomes a “cloud” it creates doubt, even if it’s ultimately fixable.
What Does “subject to” Mean in a Title Report?
“Subject to” means you are taking ownership with that issue still attached to the property. It is not being removed.
It could refer to:
Easements
CC&Rs
Liens
Restrictions or other recorded documents
Those items typically become exceptions on your title policy, meaning the title company will not insure against problems caused by them.
In simple terms: you are buying the property acknowledging that condition remains.
What is Fee Simple Ownership
Fee simple is the highest form of property ownership. You own the land and improvements outright, with no time limit.
What You Can Do
Live in it
Improve it
Sell it
Lease it
Leave it to heirs
Ownership is perpetual and fully transferable.
Important Note
You still must comply with:
Zoning laws
Easements
Liens
Taxes and eminent domain
Most properties in California, including Los Angeles, transfer as fee simple absolute unless the title report states otherwise.
Why Preliminary Reports Matter in Probate & Trust Sales
In probate, conservatorship, or trust transactions:
Title vesting may be complex
Court authority may be required
Prior liens may exist
Heirs may have recorded claims
Failure to review title thoroughly can delay closing or create post-closing liability.
If you’re thinking about selling, order your preliminary title report before going on the market.
You may discover:
Old liens you didn’t know existed
Vesting errors from trust transfers
Unreleased loans
HOA or tax issues
Easements affecting buildability
Identifying these early prevents escrow delays, buyer leverage, and last-minute renegotiations.
If you’re considering selling a duplex, fourplex, probate property, or trust-held home in Los Angeles or Santa Monica, I review title upfront — before we ever list — so there are no surprises during escrow.
Clear title equals stronger negotiating power.
If you’d like a confidential title review before listing, reach out directly.