The pre-title search is an important tool when dealing with distressed properties and plays a major role in the due diligence process. A preliminary title search is key for an objective assessment in the case of investors who are bidding on unseen properties or other instances when a full title search is difficult or unwarranted because of accessibility or a timing issue. Realtors should pull title prior to taking a listing on a short sale as all title issues need to be cleared prior to the short sale. Investors who are buying off market properties or purchasing from a sheriffs sale need to know of any liens against the property that will need to be taken care of once they purchase the property as that information will be key when negotiating the price.

The Preliminary Report is an offer to issue a policy of title insurance covering a particular estate or interest in land subject to stated exceptions. The matters shown in the report are as follows: 

  • The estate of interest covered.
  • The owner of the estate or interest.
  • The parcel of land involved.
  • The exceptions, liens, encumbrances and other risks which will not be insured against if a title policy is issued.
  • Other requirements and provisions which are reflected as "Notes" in the Preliminary Report which are removed if and when a title policy is issued.

Any judgements outstanding, easements or encroachments will reduce the effective discount that the buyer believes they are getting when purchasing the distressed property. Accordingly the pre-title search is a very worthwhile investment when purchasing a property of any type, and often pays for itself with money saving information.