Several reports are required throughout the homebuying process. Reports, such as the preliminary title report, are necessary to help ensure you are making a wise investment in any property for sale. The preliminary title report is one of the first you receive about the home you have made an offer on. Understanding it is important. To help you decipher what it contains, here is what you need to know.
Why Is a Preliminary Title Report Necessary?
The preliminary title report is important because it will state whether the seller has the right to sell the home. The title company will look for other legal claims on the property and notify you if there is a problem.
For instance, if the seller and his or her siblings inherited equal shares in the home, the siblings' ownership of the home will turn up in the title search. Before you can buy the home, the seller will have to establish ownership.
What Should You Do with the Report?
Although there is a lot of documentation involved in buying a home, it is crucial that you read the title report. Ideally, the report should be ready for review within a few days of having your offer accepted by the seller. Read the report as soon as you receive it.
If you wait to read the report, you could miss out on the chance to back out of the purchase of the home using your title contingency. The contingency has a deadline that allows you to vacate the agreement without consequence if there is a problem found with the title, such as multiple owners who have not consented to the sale of the home.
What If You Still Want to Buy the Home?
If you are committed to buying the home, there is a possibility that you and the seller can work together to resolve issues that are affecting your ability to buy the home. For instance, if there is a lien on the home from a contractor, you can ask the seller to pay the contractor to have it removed. You can even offer to pay the debt and deduct the amount from the price of the home.
How you can save the purchase of the home depends on the situation. Consult with your real estate agent or attorney to determine the best way to proceed. He or she can evaluate the problem uncovered by the preliminary title report and decide if moving forward is the right move.