What is a Title Report? Everything You Need To Know

In every property transaction, confirming ownership and knowing the hidden issues is important. A title report verifies who legally owns the property and lists any claims, debts, or restrictions tied to it.

This step is not optional. Issues are more common than most buyers realize. According to the American Land Title Association, one-third of U.S. real estate transactions have a title problem that has to be solved before closing. There are issues like unpaid taxes, undisclosed liens, boundary disputes, and easements that grant others the right to use a part of the property.

This blog will give you all the information about the title report, so you are confident and clear in your next transaction.

What Is a Title Report?

A title report is a formal document that confirms who legally owns a property and reveals any legal or financial claims, like liens, unpaid taxes, easements, or pending disputes that can affect its transfer. It‘s produced after a full title search, where public records are examined to make sure there are no hidden obstacles to the sale.

Apart from basics, title reports matter because:

In 2005, title issues that needed correction appeared in 36% of residential transactions. It increased from 25% in 2000. This shows how common these problems can be.
Title insurance claims happen in approximately 5% of real estate transactions with average payouts between $1,000 and $5,000. [Worldmetrics]
Around 40% of title insurance claims come from undisclosed easements, and 30% result from errors in public records.

This data proves that a title report is your blueprint for safe property transfers.

Purpose of a Title Report

The main goal of a title report is to protect all parties in a property transaction by identifying the risks before the sale is finalized. It is an early warning system that flags all issues that can end up in legal disputes, financial loss or delays in closing.

It helps with:

Identify and Solve Title Faults

The American Land Association shows that over 35% of real estate brings out problems like unpaid taxes, undisclosed liens, or ownership disputes that can be resolved before closing. Addressing these in advance prevents future lawsuits or property sales.

Ensure Lender Security

Mortgage lenders will not release funds without a clear title report. It makes sure that their lien will be the priority if the borrower defaults.

Avoid Transaction Delays

Complicated title problems like an unrecorded easement or a claim from the previous heir can delay closing for weeks. Identifying these early will keep the transaction schedule on track.

Reduce Financial Risk

Solving title faults after purchase can cost anywhere from $3,000 to $10,000+ in legal fees and settlement costs. [Forbes]

What Is Included in a Title Report?

A title report is divided into different sections. Each of them has a different purpose in verifying ownership and highlighting the potential risks. While formats can be different according to the title company, most reports include:

1. Legal Description of the Property

This section defines the exact boundaries, size, and location of the property using legal terms, lot numbers, and reference points from recorded plats or surveys. Even a small mistake like missing a boundary marker can lead to disputes later. According to World Metrics, incorrect legal descriptions account for about 7% of title-related claims.

2. Current Ownership Details

It includes the legal owner(s) of the property, and how the title is held, such as sole ownership, joint tenancy, or tenancy in common. This section is important for confirming that the person selling the property is legally entitled to do so. If there are errors here, it can lead to sales getting delayed or invalidated.

3. Liens and Mortgages

This documents any debts or financial obligations secured by the property, like existing mortgages, unpaid property taxes, or mechanic’ liens from contractors. These have to be cleared before closing. Half of all title insurance claims are linked to undisclosed or unpaid liens. [World Metrics]

4. Easements and Rights of Way

It notes any rights that third parties have to use part of the property, like utility companies installing power lines or a neighbor accessing a shared driveway. Easement-related disputes are common. It makes up about 40% of title insurance claims. [World Metrics]

5. Encumbrances and Restrictions

This section tells you the legal limitations on how the property can be used. For example, building height limits, land-use restrictions, or homeowners’ association rules. These restrictions stay with the property even if ownership changes and can also affect renovation plans or resale value.

6. Pending Legal Actions

This indicates if the property is subject to any lawsuits, probate proceedings, foreclosure actions, or other legal claims. Buying a property involved in litigation can slow the transfer process and increase costs.

7. Exceptions

It specifies matters that are excluded from coverage if you purchase title insurance, such as unrecorded easements or defects not found during the search. Getting to know and understand these exceptions is important because they represent potential risks that remain your responsibility after closing.

Types of Ownership

A title report records the kind of ownership with the owner’s name. The ownership types decide each party’s rights, how the property can be transferred, and what happens upon the owner’s death.

1. Sole Ownership

The property is owned by one individual or legal entity. This structure gives complete control but also places full responsibility for debts, taxes, and obligations on the owner. If the owner dies without a will, the property usually passes through probate before transfer.

2. Joint Tenancy

Two or more owners hold equal shares with a right of survivorship. If one owner dies, their share passes automatically to the surviving owner or owners without probate.

3. Tenancy in Common

Two or more owners hold separate shares, which can be equal or unequal. Each owner can sell, transfer, or will their share independently. There is no right of survivorship. Ownership passes according to the will or state law.

4. Community Property

It is recognized in specific U.S. states; this form treats most property acquired during marriage as equally owned by both spouses. Each spouse can transfer their half by will, which is subject to state laws.

5. Tenancy by the Entirety

This is available in some states for married couples. It combines joint ownership with creditor protection. In most cases, one spouse’s creditors cannot force the sale of property without both parties’ consent.

How to Get a Title Report?

A title report can be obtained from a title company, a real estate attorney, or directly from the county recorder’s office. This process includes ordering a title search, which reviews public records to combine the ownership history, liens, and any other claims that affect the property.

1. Contact a Title Company or Attorney

Most real estate transactions include a title company that conducts the search and issues the report. In some states, attorneys handle this process. The service is mostly arranged by the buyer’s agent, lender or closing coordinator.

2. Provide Property Details

The address, parcel number, and legal description are needed to pull the correct records. Providing the right details avoids any delays because of mismatched or incomplete information.

3. Title Search and Examination

The title company or attorney searches deeds, mortgages, liens, judgments, easements, and other recorded documents. This process can take anywhere from a few days to two weeks. This depends on the property’s history and the jurisdiction’s record system.

4. Receive and Review the Report

Once it is completed, the report is provided to the buyer, seller, and lender. If there are any issues, they get flagged to be solved before closing.

Cost:

The price of a title search and report usually is from $200 to $400, depending on the complexity of the records. [Forbes]
If combined with a title insurance, the total can be between $1,000 and $2,000 for a median-priced home in the U.S. [Washington Post]

How to Read a Title Report?

A title report is divided into multiple sections. Each has information that can affect the sale or transfer of property. Reviewing each section carefully before closing makes sure that legal and financial risks are addressed in advance.

1. Verify the Property Information

Confirm that the legal description, parcel number, and street address match the property. The legal description should match the recorded plat or survey and outline the property boundaries correctly. Check even the small details, like an incorrect lot number. They can cause future disputes or even title faults.

2. Check the Ownership Record

Review the current owner’s name and the form of ownership listed. This confirms the seller’s legal right to transfer the property. If the report lists multiple owners, all have to agree to and sign the transfer. Missing signatures are a common reason for closing delays.

3. Review Liens and Mortgages

Check for any existing mortgages, unpaid property taxes, mechanics’ liens, or other debts tied to the property. These stay with the property until cleared. This means a buyer could inherit them if they are not resolved. According to World Metrics, 50% of title insurance claims are linked to undisclosed or unpaid liens.

4. Examine Easements and Rights of Way

Study recorded easements that give access or usage rights to third parties like utility companies or neighboring landowners. Easements can be permanent and can limit how some parts of the property can be used. For example, a driveway easement may allow a neighbor ongoing access across part of the land.

5. Access Restrictions and Encumbrances

Check for covenants, conditions, and restrictions (CC&Rs) that order how the property can be used. These can include building height limits, prohibited activities, or design requirements set by a homeowners’ association. Violating these rules can result in legal actions or fines.

6. Look for Pending Legal Actions

Decide if the property is involved in litigation, foreclosure, probate, or other court proceedings. Buying a property under legal dispute can slow closing and create costly legal obligations for the new owner.

7. Understand the Exceptions

Exceptions are matters that are excluded from coverage under a title insurance policy, like unrecorded easements or faults that are not discovered during the search. Buyers stay responsible for these risks after purchase. So, each exception should be reviewed to assess its potential impact.

A detailed section-by-section review makes sure the title is clear. The seller is able to legally transfer ownership, and no unexpected liabilities will be inherited after closing.

When Do You Need a Title Report?

A title report is needed in most real estate transactions where ownership is being transferred or a property is being refinanced. It is the main document that confirms the seller’s legal right to sell and alerts all parties of any issues that have to be solved before closing.

Common situations where a title report is needed:

1. Buying Residential or Commercial Property

Before closing, buyers and lenders need a title report to check clear ownership and identify potential risks like liens, easements, or pending legal disputes.

2. Refinancing an Existing Mortgage

The lenders order a new title report to confirm that no new claims or faults have come up since the original purchase. This makes sure that their lien will remain in the first position on the property.

3. Property Inheritance or Estate Settlement

When a property is inherited, a title report checks the chain of ownership and confirms there are no outstanding obligations tied to the estate before the property is transferred to heirs.

4. Solving Ownership Disputes

In boundary disagreements, contested sales, or legal claims of ownership, a title report provides an official record of past transfers and encumbrances. This helps in establishing legal standing.

5. Before Selling a Property

A pre-listing title report allows sellers to identify and clear faults, making sure the transaction proceeds with clear legal authority and minimal risk for future disputes.

In all of these scenarios, the title report is a safeguard, making sure the transaction moves forward with a clear legal authority and fewer risks.

Common Issues Found in a Title Report

Title reports frequently have problems that have to be solved before the ownership can be legally transferred. Some issues are minor and easy to correct. But others can slow the process or even prevent the sale from closing.

1. Unpaid Liens or Mortgages

Outstanding debts secured by the property, like unpaid property taxes, mortgages, and contractor liens, have to be cleared before transfer. According to World Metrics, 50% of title insurance claims include undisclosed or unpaid liens.

2. Errors in Public Records

Clerical mistakes, incorrect names, or inaccurate property descriptions can create legal complications. These errors account for about 30% of title insurance claims.

3. Easements and Rights of Way

An easement can give a utility company or neighbor the right to use part of the property. Easement-related disputes are common and can limit how the property is used. Approximately 40% of title claims involve easement issues. [World Metrics]

4. Undisclosed Heirs

Inherited properties can give challenges if heirs were not properly notified or if a will was contested. This can delay or block a sale until the ownership dispute is settled.

5. Fraud and Forged Documents

Forged deeds, falsified signatures, or fraudulent transfers can invalidate ownership. Fraud accounts for up to 50% of some title insurance claims. [World Metrics]

6. Boundary or Survey Disputes

Conflicting surveys or unclear boundary lines can lead to disputes with neighbors, sometimes needing legal action or new surveys before closing.

Identifying these issues early with the help of a title report helps parties to solve them before finalizing the transaction, prevents legal disputes and protects the buyer’s ownership rights.

Related: Residential Land Development

Final Thoughts

A title report is one of the most important documents in any real estate transaction. It checks legal ownership, identifies liens, easements, and other encumbrances, and makes sure there are no unresolved claims that could affect the property after purchase. By reviewing the report thoroughly and resolving any issues before closing, buyers, sellers, and lenders protect their investments and avoid any future legal disputes.

For more information and expert guidance in reviewing title reports and navigating real estate transactions with confidence, connect with Leonard Developments. Our team will make sure every detail is handled, so your investment is secure from start to finish.