Before signing on the various dotted lines, it's important to confirm that the seller truly owns the property and isn't overlooking problems, such as outstanding mortgage payments or debts. Title companies research these reports using public records, and guarantee the findings by selling title insurance. The preliminary title report, which takes several days to complete, establishes who legally owns the property. The report indicates if the seller is the only person authorized to sell the property, and includes a list of previous owners as well as purchase and sale dates. It also lists any liens against the property.
Sellers usually pay for the report because they are responsible for guaranteeing a clear title.
The seller's real estate agent or attorney often orders the report after opening escrow. Once buyers have reviewed the title report, the buyer should discuss the findings with the seller, real estate agent and others involved in the sale. A buyer may demand that the seller clear anything on the report that could become a liability in the future, such as an existing lien. A title company often withholds proceeds from the sale of the house to pay the liens. The title company will refund the money to the seller if the seller clears up the issue.