What is the significance of the preliminary title report?

The preliminary title report holds significant importance in real estate transactions as it outlines the current status of the title. This document provides a thorough examination of public records related to the property, detailing ownership, any existing liens, encumbrances, or restrictions on the property that could affect its sale or use. By clarifying what interests exist in the property, it helps both buyers and sellers understand potential issues that may arise before the transaction is finalized.

Knowing the current status of the title is crucial for ensuring a smooth transfer of ownership. If there are any discrepancies or claims against the title, these can be addressed before closing the deal, reducing the risk of future disputes. The preliminary title report is thus an essential component of the due diligence process during a real estate transaction, ensuring all parties are fully informed.