How to Read a Preliminary Title Report

When you’re buying a home in Monterey County, the preliminary title report rarely gets the attention it deserves. It’s not flashy. It doesn’t tell you what the house smells like in the morning or how the light hits the kitchen tile at 4 p.m. But it’s the document that determines whether your ownership is legally sound.

If there’s a single paper in the escrow packet that can quietly change the course of a deal, it’s this one.

What a Preliminary Title Report Actually Is

A preliminary title report, or “prelim,” is prepared by a title company after escrow opens. It’s a snapshot of the property’s legal standing, showing who owns it, what’s attached to it, and what might need to be cleared before the sale can close.

In plain terms, it answers questions like:

• Who currently holds the title?

• Are there loans, liens, or unpaid taxes recorded against the property?

• Do other people have rights to use part of the land, such as driveways, access paths, or utility lines?

• Are there any recorded covenants or restrictions that limit what an owner can do?

It’s not the final policy, but rather the title company’s working draft. Once any issues are resolved, that same company will issue title insurance, which protects you from future claims.

Here in Monterey County, prelim reports often read like small fragments of local history. A 1930s Pacific Grove parcel might still reference a narrow access lane shared with the next lot. A Carmel Valley property might carry a recorded water rights agreement from decades ago. These aren’t problems by default, but they’re important to understand before closing. Each one tells you something about how the land has been used and what obligations might come with it.

When You’ll Receive It

Once escrow opens, the seller’s chosen title company will typically send out the preliminary report within a few business days. It will arrive before the inspection contingencies are due to expire, which gives you time to review it with your agent or, if needed, your real estate attorney.

The report is divided into sections that list who holds title, what exceptions exist, and what the title company intends to exclude from future insurance coverage unless corrected. Think of it as both a status check and a warning system. Anything recorded against the property is a potential item for discussion.

How to Read a Preliminary Title Report (Without Losing Your Mind)

The prelim is not written to be friendly. It’s a legal document first, written in a kind of shorthand that assumes you already know what “Schedule B-II Exceptions” are. But if you understand the structure, it becomes much more readable.

Here’s what to look for:

1. Ownership (Schedule A)

This section names the current vested owner. If you’re buying a home in Carmel-by-the-Sea and the report lists a family trust or an estate, that’s normal. It simply means you’ll want to confirm that the person signing the purchase contract is authorized to do so.

2. Legal Description

This is how the property is identified in public records. It might sound like “Lot 12 of Tract 401, as filed in Book 8 of Maps, Monterey County Records.” If the property is in an older area like Pacific Grove, you might see metes-and-bounds descriptions that define the property by distance and direction. It’s dry reading, but if you’re buying a home with irregular boundaries, this is where you confirm where your property actually begins and ends.

3. Liens and Deeds of Trust

These are the recorded debts or loans against the property. If the seller still has a mortgage, that deed of trust will appear here. That’s not a problem — it will be paid off through escrow. What you want to watch for are older liens that might not have been cleared. For example, a Monterey property could show an old construction lien from a contractor that was never properly released. Your agent and title officer will help resolve that before closing.

4. Easements and Rights of Way

This section outlines who else has a legal right to use part of the property. Along the Highway 68 corridor, for instance, many parcels share private driveways or access roads, which are covered by recorded easements. On the coast, you might find utility easements for underground cables or water lines.

Not all easements are visible from the street. If an easement crosses your land, it might affect where you can build or install fencing. If you’re planning any future improvements, knowing the exact location of those rights is essential.

5. Covenants, Conditions, and Restrictions (CC&Rs)

These are rules that govern the use of the property. In Pebble Beach, for example, the Del Monte Forest Protective Association enforces architectural standards and landscape guidelines. In newer subdivisions in Seaside or Marina, you might see CC&Rs limiting exterior paint colors or requiring homeowners to maintain certain design elements.

While these are not inherently negative, they can influence your long-term plans. If you’re envisioning a short-term rental or an ADU, always check whether the CC&Rs allow it.

What to Do If Something Looks Off

If you come across something that feels confusing or concerning, don’t panic. Call your agent or your title officer.

Let’s say your Carmel Valley prelim shows a “water company easement” that doesn’t make immediate sense. It could simply be a recorded right allowing the local water district to service a well or line, not a sign of a private well you’re responsible for maintaining.

Or maybe a Pacific Grove property has an “easement for sewer maintenance” running across the backyard. That’s fairly standard, but you’ll want to confirm its exact placement if you plan to add a deck or pool later.

The key is not to ignore any term you don’t understand. Prelim reports are not designed to alarm you, but to give you visibility into what you’re buying. Asking questions early avoids surprises later.

What Questions to Ask Your Agent or Title Officer

1. Is there anything unusual in this report for a property like this?
   Title officers review hundreds of prelims a year. They’ll know if an easement or lien is routine or worth a deeper look.

2. Can you show me where this easement or restriction appears on a map?
   Many title companies can overlay easements onto parcel maps, which helps you visualize their impact.

3. Are any of these items going to delay closing?
   A lien or judgment could require additional documentation or payoff before escrow can close.

4. Does anything here affect future resale?
   Restrictions that seem minor today can matter when you sell. A shared driveway or a recorded right of way can be a point of hesitation for some buyers, depending on location and clarity of access.

Common Red Flags in Monterey County

Certain title issues show up more often in our area than others. Here are a few to pay attention to:

• Water rights: Especially in Carmel Valley and rural Pebble Beach parcels, older wells or water-sharing agreements may still be on record.

• Access easements: Some Big Sur and Highway 68 properties rely on shared private roads. Maintenance costs and responsibilities are usually divided between owners, but not always clearly.

• Historic restrictions: In parts of Monterey and Pacific Grove, older properties may have preservation covenants that limit exterior changes.

• Boundary overlaps: With many parcels originally subdivided in the early 1900s, some fence lines don’t perfectly match legal boundaries. A preliminary report won’t show the fence, but it will indicate recorded lot lines that should be compared with the survey or assessor’s map.

What Happens After the Prelim

Once any outstanding issues are resolved, the title company finalizes the file and issues a title insurance policy. This policy guarantees that the title is clear and protects you from future disputes, such as someone claiming partial ownership or an unrecorded lien surfacing later.

You’ll pay for this policy at closing, and the protection lasts for as long as you own the home.

The Bottom Line

The preliminary title report can feel like a dense read. But it’s the document that tells you whether you’re truly buying what you think you are.

Reading it carefully, asking questions, and understanding what’s on record gives you clarity. In a market where every detail matters — and where homes frequently carry layers of history, easements, and shared rights — that clarity is worth a lot.

If you’re ever unsure what something means, ask. That’s what we’re here for.