Marcus is purchasing a condominium in San Francisco. The title company issues a preliminary title report showing a property tax lien from the previous owner. Marcus's agent explains the significance of this report. In California, what is the primary purpose of a preliminary title report?
Correct Answer
C) To disclose the current condition of the title and any exceptions that will not be covered by the title insurance policy
A preliminary title report (prelim) in California is an offer to issue title insurance, not a guarantee of clear title. It discloses the current state of the title, including liens, encumbrances, easements, and other matters that will appear as exceptions in the final title insurance policy. It allows the buyer to review and address title issues before closing.
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Related Concepts
A special warranty deed guarantees that the grantor has not caused any title defects during their period of ownership, but does not warrant against defects that existed before the grantor acquired the property.
Title insurance is a policy that protects the insured party against financial loss from defects in title that were not discovered during the title search. Unlike other insurance, it covers past events rather than future risks.
A title search is an examination of public records to determine the history of ownership, liens, encumbrances, and other interests affecting a property. It verifies that the seller has the legal right to transfer the property.
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A California real estate licensee is explaining the essential elements of a valid deed to a first-time buyer. Which of the following is NOT a requirement for a valid deed in California?
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A title officer in California is reviewing a property's chain of title and discovers several potential issues. Which of the following would NOT typically be covered by a CLTA standard owner's title insurance policy?