You Bought the House. But What Exactly Are You Buying?
Imagine this.
You find your dream home.
You negotiate the price.
Your offer gets accepted.
You celebrate.
The inspection comes back.
Everything looks manageable.
Your lender is moving forward.
Then escrow sends you a document.
It's several pages long.
It has names you've never heard of.
Legal descriptions.
Recording numbers.
Easements.
Exceptions.
Liens.
Trust deeds.
And a lot of legal language that seems to have been written specifically to make normal people nervous.
You look at it and think:
"Is something wrong with my house?"
Maybe.
Maybe not.
Most of the time, the title report is simply documenting the legal history and interests associated with the property.
But that doesn't mean you should ignore it.
Because the preliminary title report is one of the documents that helps answer a very important question:
"What am I actually buying?"
Quick Answer
A Preliminary Title Report is a document prepared during the title process that provides information about the property's recorded ownership history and identifies matters affecting title, such as liens, easements and other recorded encumbrances.
The California Department of Real Estate specifically identifies the Preliminary Title Report as a document that identifies the ownership history of the property and liens or encumbrances affecting it.
It is an important part of the California home-buying process.
But there's something buyers need to understand:
A preliminary title report is not the same thing as title insurance.
And it isn't simply a document you should sign without reading.
Why Does Title Matter?
Let's say you're buying a house.
You assume:
"The seller owns it."
That's reasonable.
But real estate ownership can involve more than simply knowing someone's name is on a deed.
There may be:
- Mortgages.
- Trust deeds.
- Tax liens.
- Judgment liens.
- Easements.
- Covenants.
- Restrictions.
- Rights of way.
- Other recorded interests.
Some of these may be completely normal.
Others may require attention.
The title process is designed to uncover recorded matters affecting the property.
Think of Title as the Property's Legal History
Your inspection tells you about the physical condition.
Your appraisal tells the lender about value.
Your insurance tells you about risk protection.
Your HOA documents tell you about the association.
Your preliminary title report tells you about the recorded ownership and interests affecting the property.
Each document answers a different question.
That's why buyers shouldn't rely on one document to tell them everything.
The House Can Look Perfect and Still Have a Title Issue
This is one of the reasons title work is so important.
Imagine walking through a home.
Everything looks fantastic.
New kitchen.
New flooring.
Beautiful backyard.
Fresh paint.
Nothing looks wrong.
But the title report identifies a recorded easement affecting part of the property.
You wouldn't see that during a normal home inspection.
The house didn't change.
You simply learned something about the property that isn't visible from the kitchen.
What Is an Easement?
An easement generally gives someone else a specific right to use part of a property for a particular purpose.
For example, an easement could relate to:
- Utilities.
- Access.
- Drainage.
- Roads.
- Sewer lines.
- Power lines.
- Other infrastructure.
An easement doesn't necessarily mean someone else owns your property.
It means someone may have a legally recognized right affecting a portion of it.
An Easement Doesn't Automatically Mean "Bad"
This is important.
Buyers sometimes see the word:
EASEMENT
and immediately panic.
Don't.
Many properties have ordinary utility or access easements.
The question is:
"What does the easement actually allow?"
And:
"Where is it located?"
And:
"Does it affect how I intend to use the property?"
Here's a Real-World Example
Imagine you're buying a house with a huge backyard.
You have plans to:
Build an ADU.
Then you discover a utility easement running through the area where you planned to build.
Now you have a different question:
Can I still build what I want?
That's why title information can matter beyond simply determining who owns the property.
Another Example: Access
Imagine a property appears to have a driveway leading to the street.
But the legal access arrangement is more complicated.
Perhaps an easement provides access across another parcel.
That may be completely normal.
But it is something you want to understand before buying.
What Is a Lien?
A lien is generally a legal claim or security interest against property associated with an obligation.
A mortgage is a common example.
If someone borrows money to buy a house, the lender typically records a security interest against the property.
That's normal.
The problem isn't:
"There is a lien."
The question is:
"What lien is it, who holds it, and what happens to it when the property is sold?"
The Seller's Mortgage Will Usually Be Paid Off
Suppose the seller has:
$700,000 mortgage
and sells the house for:
$1,200,000.
The seller's loan doesn't normally just transfer to you.
The transaction is structured so that the existing loan is paid or otherwise handled through escrow as required.
That's one of the reasons escrow and title are so important.
Not Every Lien Is a Mortgage
A title report can identify other recorded claims.
Potential examples can include:
- Tax liens.
- Judgment liens.
- Mechanic's liens.
- HOA-related liens.
- Other recorded obligations.
The specific circumstances matter.
What If the Seller Owes More Than the House Is Worth?
Now you've entered a different situation.
Suppose:
Sale price = $1,000,000
but the seller's recorded obligations exceed the amount available from the sale.
That can create complications.
This is one reason title and escrow need to identify outstanding obligations and determine whether the transaction can close.
What Is an Encumbrance?
An encumbrance is a broad term for a claim, restriction or interest affecting property that may limit or affect ownership or use.
It can include things such as:
- Liens.
- Easements.
- Restrictions.
- Other recorded interests.
The word can sound scary.
But not every encumbrance is a problem.
The Important Question Is:
"Does this matter to me?"
That's the question buyers should ask.
Not:
"Is there an exception?"
There may be several.
Instead:
"What is it, and how does it affect the property?"
What Is a Title Exception?
When title insurance is issued, certain matters may be excluded from coverage.
These are commonly referred to as exceptions to coverage.
Some may be standard.
Others may be property-specific.
This is one reason you shouldn't assume:
"I have title insurance, so everything is covered."
That's not how title insurance works.
Title Insurance Is Different From Homeowners Insurance
This distinction is extremely important.
Homeowners Insurance
Generally protects against certain covered property risks such as specified physical losses and liability, depending on the policy.
Title Insurance
Protects against certain covered title-related risks.
The California Department of Insurance explains that title insurance protects the buyer and/or lender against certain unknown defects in title, while homeowners insurance addresses different risks associated with the home and its contents.
They're completely different types of insurance.
Why Do You Need Title Insurance?
Imagine buying a home.
Years later, someone claims they have an ownership interest in the property.
Or an old recorded issue surfaces.
Or there is a covered defect in the title history.
Depending on the circumstances and policy, title insurance may provide protection against certain covered losses.
That's the basic idea.
You're protecting against certain title-related risks that may not be obvious from simply walking through the house.
Owner's Title Policy vs. Lender's Title Policy
This is another distinction buyers should understand.
Lender's Policy
Protects the lender's interest in the property.
Owner's Policy
Protects the buyer's ownership interest, subject to the policy's terms, exclusions and coverage limits.
The California Department of Insurance explains that a lender's title policy protects the lender's security interest and does not protect the buyer; an owner's policy is designed to protect the buyer.
That's a major difference.
"But My Lender Has Title Insurance"
That doesn't necessarily mean:
"I'm personally protected."
A lender's policy primarily protects the lender's interest.
If you want protection for yourself, you need to understand the owner's title policy.
What Does the Preliminary Title Report Actually Show?
Depending on the transaction, you may see information regarding:
- Current record owner.
- Vesting.
- Legal description.
- Deeds.
- Deeds of trust.
- Easements.
- Covenants.
- Restrictions.
- Liens.
- Assessments.
- Other recorded matters.
- Requirements for issuing the title policy.
- Exceptions to coverage.
The exact format varies by title company.
What Is "Vesting"?
You may see the word:
Vesting
in your title documents.
This refers to how ownership is held.
For example, ownership might be held by:
- An individual.
- A married couple.
- Multiple individuals.
- A trust.
- An LLC or other entity.
The way title is held can have legal and financial implications.
Don't Guess How You Want Title Held
This is one area where buyers should get appropriate professional advice.
How you take title can have implications involving:
- Estate planning.
- Taxes.
- Liability.
- Ownership rights.
- Future transfers.
Your Realtor can explain the transaction process, but questions about the legal or tax consequences of how you hold title should be directed to the appropriate attorney or tax professional.
What Is a Legal Description?
The title report may include a legal description of the property.
This is not necessarily the same as the simple street address you're used to.
The street address is what you use to order pizza.
The legal description is part of the legal identification of the property.
Why Does That Matter?
Because real estate is legally identified through recorded documents and legal descriptions.
The title company uses those records to identify the property and interests affecting it.
What Is a Deed?
A deed is a legal instrument used to transfer an ownership interest in real property.
When you buy a home, a deed is recorded to transfer title according to the transaction documents.
The title process examines the recorded history of the property.
What Is a Deed of Trust?
California commonly uses deeds of trust as security instruments for real estate loans.
If you borrow money to buy a home, the lender's security interest is typically reflected in recorded documents.
This is normal.
Again:
Not every item on a title report is a problem.
What Should Make a Buyer Pay Attention?
Here are some items worth asking about.
Unreleased Liens
A lien that should have been removed but remains recorded.
Unexpected Ownership Interests
Someone other than the expected seller appears to have an interest.
Unusual Easements
An easement that could affect how you intend to use the property.
Restrictions
Recorded restrictions that could affect your plans.
Judgment Liens
Claims arising from legal judgments.
Tax Liens
Outstanding tax-related claims.
HOA-Related Issues
Recorded obligations associated with the association.
Unresolved Prior Transactions
Something in the title history doesn't line up with what you expected.
These aren't automatic reasons to cancel a purchase.
They're reasons to ask questions.
What About Solar?
Solar can create another layer of complexity.
If the property has solar panels, determine:
Does the seller own them?
Are they leased?
Are they financed?
Is there a recorded financing interest?
Will the buyer assume an obligation?
Does the transaction require documentation?
The California DRE specifically advises buyers to ask about the financial arrangement associated with an existing solar system.
What About HOA Properties?
If you're buying an HOA property, title and HOA documents are separate pieces of due diligence.
The title report may show certain recorded matters.
The HOA documents provide information about:
- Rules.
- Assessments.
- Dues.
- Restrictions.
- Financial condition.
- Maintenance responsibilities.
You need both.
Title vs. HOA vs. Inspection
Think about it this way:
Home Inspection
"What's wrong with the physical property?"
HOA Documents
"What am I agreeing to as a member of this association?"
Preliminary Title Report
"What recorded interests and obligations affect ownership of this property?"
Appraisal
"What is the property worth for lending purposes?"
Insurance
"Can I protect this property against covered risks?"
Loan Documents
"What are the terms of my financing?"
That's why buying a house involves so many documents.
Each one answers a different question.
What If You See Something You Don't Understand?
This is the most important advice in this article:
Don't Ignore It.
And don't necessarily panic.
Ask:
"What is this?"
Then:
"Why is it there?"
Then:
"Does it affect my ownership or intended use?"
Then:
"Is it covered by the title policy?"
Then, if appropriate:
"Do I need legal or professional advice?"
Your Realtor Isn't the Title Attorney
A good Realtor should help you understand the transaction and identify questions.
But title law can get complicated.
If you're dealing with:
- A complicated easement.
- Ownership dispute.
- Estate issue.
- Trust issue.
- Boundary dispute.
- Unusual restriction.
- Significant lien.
- Legal interpretation.
you may need an attorney or other qualified professional.
Don't expect your Realtor to provide legal advice.
The Same Goes for Tax Questions
Suppose you discover a complicated ownership structure.
Or you're considering taking title in a trust.
Or you're buying through an LLC.
Or you're selling another property.
The tax consequences can vary.
That's a conversation for a qualified tax professional.
Don't Wait Until the Day Before Closing
This is another important point.
If the title report arrives:
Read it.
If something doesn't make sense:
Ask.
If a professional needs to investigate something:
Give them time.
Don't wait until you're sitting at the escrow table wondering what an easement means.
What Happens If There Is a Title Problem?
The answer depends entirely on the problem.
Some issues are easy to resolve.
Others may require:
- Documentation.
- Releases.
- Payoffs.
- Corrections.
- Additional research.
- Legal work.
- Negotiation.
- Time.
That's why title review should happen early enough to address issues before closing.
Example: An Old Mortgage
Suppose the title report shows an old deed of trust.
The seller says:
"I paid that loan off years ago."
Great.
But if the lien wasn't properly reconveyed or released in the public record, the title company may need documentation to clear it.
That's very different from discovering the seller currently owes the money.
Example: A Utility Easement
Suppose you discover:
10-foot utility easement
across the side yard.
If you're simply planning to landscape the area, it might not matter much.
But if you want to build:
A large addition
it could matter significantly.
Same easement.
Different buyer.
Different impact.
Example: Access Easement
Suppose your property uses an access road shared with another parcel.
That may be perfectly normal.
But you want to know:
Who has the right to use it?
Who maintains it?
Is access properly documented?
Are there maintenance obligations?
Those questions matter.
Title Issues Can Be Boring Until They Aren't
That's probably the best way to describe title.
Most buyers don't want to spend an afternoon reading legal descriptions.
I understand.
But title problems can become expensive when they're ignored.
So think of title review as:
Boring now
versus:
Potentially painful later.
I'll take boring.
What Buyers Should Look For in the Report
When you receive your preliminary title report, start by identifying:
1. Current Owner
Does it match the seller?
2. Property
Does the legal description correspond to the property you're purchasing?
3. Liens
What recorded claims exist?
4. Easements
Are there rights affecting the property?
5. Restrictions
Are there recorded restrictions?
6. Requirements
What does the title company need before issuing the policy?
7. Exceptions
What matters may be excluded from coverage?
Don't Just Read the First Page
Sometimes buyers see:
"Title vested in..."
and stop reading.
Don't.
The information later in the report can be just as important.
Title Insurance Isn't a Substitute for Reading the Report
This is worth repeating.
A buyer shouldn't think:
"I'm getting title insurance, so I don't care what's in the title report."
The title report and title insurance work together, but they serve different purposes.
The California Department of Insurance explains that title insurance policies contain terms, conditions and exclusions, and consumers should understand the protection provided.
Can You Shop for Title Insurance?
In California, title insurance rates are filed with the Department of Insurance, and the state notes that title insurers and underwritten title companies may have different costs and services. The department specifically encourages consumers to compare title insurance costs and services.
That's useful information.
You don't necessarily have to assume:
"This is the only title company I can use."
Who Pays for Title Insurance in California?
This is one of those questions where people often give an overly simple answer.
There are customary practices that vary by region.
The California Department of Insurance explains that title insurance payment practices vary by locality and that the parties can negotiate a different allocation of fees. It notes that Northern California commonly differs from Southern California in customary practices.
So don't assume:
"The seller always pays."
or:
"The buyer always pays."
Look at the contract and local practice.
Why This Matters in the East Bay
You're buying in:
Danville
San Ramon
Dublin
Pleasanton
Livermore
Walnut Creek
or another East Bay community.
You may have a property with:
- Older ownership history.
- Established easements.
- HOA documents.
- Solar.
- Shared access.
- Older improvements.
- Recorded restrictions.
- Multiple structures.
The older and more complicated the property, the more important it can be to understand what the recorded documents actually say.
The East Bay Has a Lot of Older Housing Stock
That's one reason title diligence shouldn't be treated as a formality.
A home built decades ago may have had:
- Multiple owners.
- Refinancings.
- Additions.
- Easements.
- Recorded agreements.
- Trusts.
- Estate transfers.
- Other recorded documents.
The title report helps bring that history into the current transaction.
What About New Construction?
New construction can have its own title considerations.
There may be:
- CC&Rs.
- HOA documents.
- Easements.
- Development restrictions.
- Public reports.
- Infrastructure agreements.
New doesn't automatically mean:
"No title issues."
What About Rural or Large-Lot Properties?
This is where easements and access can become particularly important.
If you're buying a larger property, ask about:
Access
Utilities
Shared driveways
Private roads
Water rights
Drainage
Easements
Boundary issues
The bigger and more unusual the property, the more important it can be to understand the legal and recorded framework surrounding it.
What About a Property With Multiple Units?
A duplex, triplex or fourplex can involve additional considerations.
You want to understand:
- Ownership.
- Legal descriptions.
- Access.
- Utility arrangements.
- Easements.
- Tenancies.
- Recorded restrictions.
- Existing liens.
The title report is one piece of that due diligence.
Title and Tenants
If you're buying an investment property with tenants, title isn't the only thing you need to investigate.
You also need to understand:
Existing leases
Deposits
Tenant rights
Rental agreements
Estoppel issues where applicable
Property management
The title report won't answer all of those questions.
Again:
One document doesn't tell you everything.
What About a Trust?
You may see a trust named in the title history.
That isn't necessarily unusual.
But if the current seller is a trust or estate, additional documentation may be required to establish authority to sell.
That's one of the situations where the title company and appropriate professionals become particularly important.
The Goal of Title Work
The goal isn't to produce a report that looks impressive.
The goal is to help establish:
Who owns the property.
What recorded interests affect it.
What needs to be addressed before closing.
What coverage can be provided through title insurance.
That's why title work matters.
My Advice to Buyers
When you receive your preliminary title report, don't throw it into a folder and forget about it.
Instead:
Step 1
Confirm the owner.
Step 2
Review the legal description.
Step 3
Look for liens.
Step 4
Look for easements.
Step 5
Look for restrictions.
Step 6
Review the exceptions.
Step 7
Ask questions about anything unfamiliar.
Step 8
Make sure unresolved issues are addressed before closing.
Step 9
Review the final title policy information.
Step 10
Keep your closing documents.
The Five Questions Every Buyer Should Ask
If you remember nothing else from this article, remember these:
1. Who actually owns the property?
2. Are there liens that need to be cleared?
3. Are there easements or restrictions that affect how I can use the property?
4. What is my title insurance actually covering?
5. Is there anything in the report I don't understand?
If you can answer those five questions, you're having a much better title conversation.
Common Title Mistakes Buyers Make
Mistake #1: Assuming the Seller Owns Everything Free and Clear
The title report tells you what is recorded.
Mistake #2: Ignoring Easements
An easement may affect future improvements.
Mistake #3: Assuming Every Lien Is a Problem
Mortgages and other normal liens can appear.
Understand them before panicking.
Mistake #4: Assuming Title Insurance Covers Everything
It doesn't.
Policies have terms, exclusions and exceptions.
Mistake #5: Confusing Homeowners Insurance With Title Insurance
They're completely different.
Mistake #6: Waiting Until Closing to Ask Questions
Give the professionals time to investigate.
Mistake #7: Assuming the Realtor Can Interpret Everything
Some issues require legal or tax advice.
Mistake #8: Not Understanding Solar Financing
Solar arrangements can involve additional financial obligations and documentation.
Mistake #9: Ignoring the Legal Description
Make sure the property being described matches what you're buying.
Mistake #10: Treating Title as "Just Paperwork"
It isn't.
It's part of understanding ownership.
Frequently Asked Questions
What is a preliminary title report?
It is a title company's report identifying recorded information about the property's ownership and matters affecting title, including liens, easements and other encumbrances.
Is a preliminary title report the same as title insurance?
No. The preliminary title report provides information about recorded title matters. Title insurance is an insurance policy providing protection against specified covered title risks.
Does a title report show who owns the house?
It generally identifies the current record ownership and vesting reflected in the title records.
What is an easement?
An easement generally gives someone a specific right to use or access part of another property for a defined purpose.
Is an easement bad?
Not necessarily. Many properties have ordinary utility or access easements. The important question is how the specific easement affects the property.
What is a lien?
A lien is generally a legal claim or security interest against property associated with an obligation.
Will the seller's mortgage appear on the title report?
Existing deeds of trust or other recorded security interests can appear. The transaction generally addresses the seller's existing obligations through escrow and the title process.
What is title insurance?
Title insurance protects against certain covered title-related risks according to the policy's terms, conditions, exclusions and exceptions.
Do I need owner's title insurance?
It can provide protection for the buyer's ownership interest, subject to the policy. Discuss the specific coverage with your title company.
Does my lender's title insurance protect me?
A lender's title policy primarily protects the lender's security interest. It does not provide the same protection as an owner's policy.
Can I choose the title company?
California consumers have the ability to negotiate title and escrow arrangements, subject to the transaction and lender requirements. The DRE notes that buyers have a right to negotiate regarding the escrow and title company.
Who normally pays title insurance in California?
Customary practices vary by region. In Northern California, buyers commonly pay the owner's title premium, while the parties can negotiate a different arrangement.
What if I find a lien on the title report?
Don't panic. Ask the title and escrow professionals what the lien is, whether it is valid, and how it will be addressed before closing.
What if I find an easement?
Determine exactly what rights the easement creates, where it is located and whether it affects your intended use of the property.
Can a title issue stop a home sale?
Potentially. Some title problems can require additional documentation, releases, legal work or other resolution before a transaction can close.
Does a home inspection find title problems?
Generally, no. A home inspection evaluates physical conditions; title research evaluates recorded ownership and interests.
Does an appraisal find title problems?
An appraisal primarily evaluates value for lending purposes. It is not a substitute for title research.
Does HOA documentation replace a title report?
No. HOA documents and title documents address different issues.
Related East Bay Resources
- Buying a Home in California? Why Homeowners Insurance Matters
- How Much Money Do You Really Need to Buy a Home in California?
- Buying a Home With an HOA in California?
- California Home Buyer Disclosures Explained
- What Happens After Your Offer Is Accepted?
- How to Win a Multiple-Offer Situation in California
- What Happens During a Home Inspection in California?
- What Happens If the Home Appraisal Comes in Low?
- What Are Mello-Roos Taxes?
- What Is a Supplemental Property Tax Bill?
- What Should You Know Before Buying a Home With Solar?
- How Much House Can You Really Afford in the East Bay?
- How to Choose the Right East Bay Neighborhood
Your Next Step
Buying a home is emotional.
That's part of what makes it exciting.
You walk through the front door and start imagining:
Your furniture.
Your family.
Your backyard.
Your holidays.
Your life.
But somewhere between having your offer accepted and getting the keys, you need to take a step back and look at the property objectively.
The preliminary title report is part of that process.
Don't look at it as:
"Another document I have to sign."
Look at it as:
"Another opportunity to understand what I'm buying."
Ask questions.
Understand the easements.
Understand the liens.
Understand the restrictions.
Understand the title insurance.
And if something doesn't make sense, get the right professional involved.
Because buying a home isn't just about finding a property you love.
It's about making sure the property you're buying is actually the property you think you're buying.
If you're purchasing a home in Danville, San Ramon, Dublin, Pleasanton, Livermore, Alamo, Walnut Creek or another East Bay community, I want you to feel confident not just walking through the front door—but understanding everything that comes with owning it.
After all:
The house is what you see. Title is part of what you don't.
Waleed "Walter" Akbar
Everhome Real Estate
📞 (510) 541-1610