PRELIMINARY TITLE REPORTS

“Title” to real property means who owns the property.  It is prudent, when buying or selling California real property, to purchase title insurance, which pays for damage, if there turns out to be a problem with your title.  Title problems can occur for many reasons.

First, precise descriptions of what land is owned is set forth in long and complex legal descriptions.  (An alternative way to identify land is the Assessor’s Parcel Number or APN.)   Given how complex these descriptions can be, errors can creep in.  Second, over the years, real property tends to get transferred many times, to be divided, to have easements granted, and for other events to occur which confuse who owns what.

As a rule, you will first obtain a preliminary title report, which will list the legal description to the property, tell you who presently owns the property and then list deeds of trust, mortgages, liens, easements and other legal documents, which may affect title.  A well-drafted offer to purchase real estate will make it a contingency of the purchase that a proper preliminary title report is obtained.  Then, when the deal closes, you should obtain a formal title insurance policy.  This is an assurance, from a major company, that you have, in fact, purchased title to the property, and, if there are problems with title, they the insurance company will pay for them.

Real estate transactions tend to involve large amounts of money or value.  All of that value can be at risk, if there are title problems.  The cost of title insurance is very low, compared to the cost of an uninsured title problem.

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