Title Tips
Understanding the Statement of Information
The Statement of Information is a critical document used in title searches to differentiate between parties with common names. It provides personal details like birthdate, driver’s license number, and past addresses to help title companies ensure accurate searches and avoid confusion with liens or judgments against someone with a similar name.
Providing a complete and accurate SI early in escrow helps prevent delays in clearing title issues—especially for common names like John Smith or Maria Garcia. It’s a simple but essential step in ensuring a smooth closing process.
The Importance of Legal Vesting
Legal vesting describes how individuals or entities hold title to real property. Common vesting options include Joint Tenancy, Tenancy in Common, and Community Property (in states like California).
How someone holds title affects their rights during ownership and what happens when they pass away. For example, Joint Tenancy includes the right of survivorship, meaning the surviving owner automatically receives the deceased’s interest—avoiding probate. Make sure clients consult with legal or tax professionals to choose the vesting that fits their goals.
Watch for CC&Rs in a Preliminary Title Report
CC&Rs stand for Covenants, Conditions, and Restrictions—rules placed on a property by a homeowners’ association (HOA) or developer. They can affect how a property can be used, what can be built, or even the type of landscaping allowed.
When reviewing a prelim, always check the CC&Rs section for any unusual or restrictive clauses. Buyers should be aware of these early on, especially if they plan renovations or have specific use intentions for the property. It’s a crucial part of due diligence.
What is a Cloud on Title?
A “cloud” on title refers to any issue or irregularity that may affect the ownership or transferability of real property—such as an unpaid lien, a forged document, or an unreleased mortgage.
A cloud must be resolved before closing, as it can delay or even prevent a sale. Title companies identify and work to clear these issues during escrow to ensure the buyer receives clean, marketable title. It’s one of the key reasons title insurance is so valuable.
The Role of Easements in a Title Report
An easement is a legal right for someone to use a portion of another person’s property for a specific purpose—like utility access or a shared driveway.
Always check for recorded easements in the prelim, especially for access or utility rights. Easements stay with the property (they “run with the land”), meaning they affect all future owners. Buyers should be made aware of any easements and understand how they might impact property use or value.
Know the Difference Between Insured and Uninsured Deeds
An insured deed is one that has gone through a formal escrow process and is backed by title insurance. An uninsured deed—such as a quitclaim deed transferred between family members—may bypass those safeguards.
Always be cautious with uninsured deeds. They may skip critical title checks, leaving the new owner vulnerable to undiscovered liens or claims. For any property transfer, even between relatives, a title search and policy can help ensure clean ownership and peace of mind.
Understanding Property Taxes and Supplemental Tax Bills
When a property changes ownership or new construction is completed, the county reassesses the property’s value. This can result in a supplemental tax bill, which is separate from the regular annual property tax bill.
Many buyers are unaware of this additional bill and may be caught off guard when it arrives months after closing. As a best practice, always inform clients about the potential for supplemental taxes during escrow. It’s a proactive way to build trust and prevent future surprises.
The Importance of a Legal Property Description
A legal property description precisely defines the boundaries and location of a parcel of real estate, often using metes and bounds, lot and block, or government survey systems.
The address alone is not enough for legal purposes—every transaction relies on the legal description in the deed and title report. Always verify that the legal description matches what’s intended in the sale or refinance to avoid issues with boundaries or ownership later on.
Why a Preliminary Change of Ownership Report (PCOR) Matters
The PCOR is a form filed with the county assessor when property ownership changes. It provides details about the transaction—like purchase price and type of transfer—which helps determine how the property will be reassessed for tax purposes.
Filing the PCOR correctly and promptly can prevent delays in recording and help avoid unnecessary reassessment penalties. It’s also a way for buyers to potentially qualify for exclusions, such as parent-child transfers. Always double-check it’s completed accurately during escrow.
Be Aware of Subordination Agreements
A subordination agreement is a legal document that establishes one party’s claim or interest as inferior to another’s—often used when refinancing a property with multiple loans.
If a homeowner has a second mortgage or HELOC and wants to refinance the first mortgage, a subordination agreement ensures the new first loan retains its senior position. Without it, the refinance could be delayed or jeopardized. It’s a great reminder to review all liens early in the process.
Mechanic’s Liens and Their Impact on Title
A mechanic’s lien is a legal claim against a property for unpaid labor or materials provided during construction or improvements.
Mechanic’s liens can be recorded after work is completed, even if a sale has already closed. This is why title companies often require lien waivers or indemnity agreements for recent work. Educating clients on the importance of paying contractors promptly and keeping good records helps avoid unexpected claims that could delay or derail a transaction.
Understand the Role of a Notary in Real Estate Transactions
A notary public verifies the identity of the person signing a document and ensures they are signing willingly and knowingly. In real estate, notarization is required for deeds and other key documents to be recorded with the county.
Valid identification is a must at signing appointments, and that notarization helps protect against fraud. Mobile notaries offer flexibility and can meet clients wherever they are, helping to keep transactions on track.
Know the Difference Between an ALTA Policy and a CLTA Policy
ALTA (American Land Title Association) and CLTA (California Land Title Association) policies both provide title insurance coverage, but ALTA policies offer broader protection, especially for lenders. ALTA policies are commonly used in lender transactions and include coverage for off-record risks.
It’s important to understand which policy is being issued and why. While buyers typically receive a CLTA Owner’s Policy, lenders often require an ALTA Lender’s Policy. Knowing the distinctions helps agents and clients better navigate risk and coverage in a transaction.
The Importance of Reviewing the “Exceptions” Section in a Title Policy
The title insurance policy includes a list of exceptions—items not covered by the policy, such as easements, CC&Rs, or unpaid property taxes.
The title policy doesn’t insure against everything. The “Schedule B” section lists specific exceptions they should understand before closing. Reviewing this list helps avoid surprises and ensures buyers know what limitations come with the property. It’s an essential part of due diligence.
Understanding “Owner’s Affidavits” in Escrow
An Owner’s Affidavit is a document signed during escrow in which the seller confirms facts about the property—such as no outstanding work done recently, no undisclosed leases, or other claims.
This affidavit helps the title company assess potential risks and uncover issues not visible in public records. It’s especially important for confirming no recent improvements that might lead to mechanic’s liens. A well-informed agent can explain its purpose and help ensure smooth closings.
Power of Attorney (POA) Use in Real Estate Transactions
A Power of Attorney allows someone to act on behalf of another, including signing real estate documents. However, its use must be approved by the title company and the document must be properly executed and recorded.
Not all POAs are acceptable for real estate transactions. Title companies will require a review to ensure it grants specific authority to buy, sell, or encumber real property. Always submit the POA early in escrow for approval to avoid delays at closing.
Why the Vesting on the Deed Must Match the Buyer’s Intent
Vesting determines how a buyer holds title to the property—whether individually, jointly, in trust, or through an entity. Errors in vesting can lead to future legal complications or probate issues.
Always verify the buyer’s intended vesting with them and, if needed, suggest they consult legal or tax professionals. Ensuring the correct vesting before recording avoids the need for costly and time-consuming corrective deeds later on.
Why Property Profiles Are Powerful Tools
A property profile provides a snapshot of key details about a property—such as ownership history, assessed value, parcel number, legal description, and recorded documents like deeds or liens.
Use property profiles as a proactive tool when prospecting or preparing for a listing appointment. They offer valuable insights for both agents and clients, help identify potential title issues early, and demonstrate your professionalism and preparedness.
Understand the Difference Between a Grant Deed and a Quitclaim Deed
A Grant Deed conveys ownership and includes guarantees that the seller has not transferred the property to anyone else and that the property is free from undisclosed encumbrances. A Quitclaim Deed, on the other hand, transfers whatever interest the grantor has—with no warranties.
Always clarify with clients which type of deed is being used. While quitclaim deeds are common in transfers between family members or in divorces, they offer no protection if title issues arise later. Grant deeds are more standard in sales because of the built-in assurances.
Be Mindful of Trust Vesting in Real Estate Transactions
When a property is vested in the name of a trust, additional documentation is usually required during a sale or refinance—such as a Certification of Trust or the trust agreement itself.
Always verify if the property is held in a trust early in the process. Title companies will need to confirm the trustee’s authority to act on behalf of the trust. This can prevent closing delays and ensure a smooth transaction, especially when dealing with estate planning-related sales.
Be Aware of the Preliminary Title Report’s Effective Date
The effective date on a prelim indicates when the title company last pulled public records to check for liens, encumbrances, or ownership changes. Anything recorded after this date won’t appear on the report.
Make sure to order an updated prelim if significant time passes before closing or if there’s any concern about new activity (like a recorded lien or transfer). This ensures no surprises and maintains clear title at the time of transfer.
Understanding “Subject-To” Transactions
A “subject-to” transaction occurs when a buyer takes title to a property subject to the existing mortgage—meaning the loan remains in the seller’s name, but the buyer takes over payments.
These deals can be complex and carry risk. Title companies may limit their involvement or require specific documentation. Educate clients that while “subject-to” deals can be creative solutions, they should always involve legal and title review to avoid future complications or disputes.
Understand What a “Chain of Title” Is
The chain of title is the complete history of ownership transfers for a property, documented through recorded deeds. A clear chain shows unbroken ownership from the current owner back to the original.
Title companies examine the chain of title to ensure there are no gaps, errors, or fraudulent transfers. If the chain is broken, it can cloud the title and delay closing. Reviewing and resolving these issues is a key reason title insurance is essential in every transaction.
Know When a Property Is in Probate
If a property owner passes away without a trust or joint tenancy, the property may go through probate—a court-supervised process to distribute the estate.
Transactions involving probate require court approval and may involve delays. Title companies will need court documents, such as Letters of Administration or a court order to sell. Always ask early in the transaction if the seller inherited the property recently to avoid surprises and keep timelines realistic.
Understanding the Role of a “Deed of Trust”
In many states like California, a Deed of Trust is used instead of a mortgage. It involves three parties: the borrower (trustor), the lender (beneficiary), and a neutral third party (trustee) who holds the legal title until the loan is paid off.
The Deed of Trust allows the trustee to initiate a non-judicial foreclosure if the borrower defaults—streamlining the foreclosure process. Agents should be familiar with this structure and be able to explain how it impacts buyers, especially in financing scenarios.
Watch for Unreleased Mortgages on Title
Sometimes, past mortgages or home equity lines of credit (HELOCs) remain on title records even after they’ve been paid off, due to a missing or unrecorded reconveyance deed.
Unreleased mortgages can delay closings or complicate refinancing. Title companies will require proof of payoff and may need to work with the lender to obtain and record the reconveyance. It’s a reminder that just because a debt is paid doesn’t mean it’s off title—verification matters.
Understand the Role of a Title Search
A title search is a deep dive into public records to verify a property’s legal ownership and identify any issues—like liens, encumbrances, easements, or unpaid taxes—that could affect the title.
The title search is the foundation of a safe transaction. It helps uncover potential problems before closing, allowing time to resolve them. This process, handled by the title company, ensures that buyers receive clear, marketable title—and is a major reason why title insurance exists.
Always Check for HOA Liens or Restrictions
If a property is part of a Homeowners Association (HOA), unpaid dues or special assessments can become a lien against the property—impacting title and delaying closing.
Make sure to verify the HOA’s status early in escrow. Title companies typically order an HOA demand to disclose outstanding balances and restrictions. Educating clients about these potential financial and legal obligations helps prevent surprises and ensures a smoother transaction.
Be Aware of Forgery and Fraud Risks in Title
Title fraud—such as forged deeds or fraudulent transfers—is a growing concern, especially with vacant or rental properties where the owner isn’t actively present.
Title companies carefully review signatures, chain of title, and identity verifications to detect possible fraud. Encourage clients to safeguard their title with owner’s title insurance and monitor their property records regularly. Awareness and proper safeguards are the best defense against fraudulent claims.
Know the Importance of Legal Access
A property must have legal access to a public road or an easement that allows ingress and egress. Without it, the property could be considered landlocked, creating major issues for financing and usability.
Always confirm legal access during the title search—especially for rural or oddly shaped lots. The existence of a driveway does not always mean there’s legal access. Title insurance can help protect buyers against future disputes, but early detection is key to a smooth transaction.
Understand the Impact of Divorce on Title
When a married couple divorces, property division must be clearly documented—typically through a court order or an Interspousal Transfer Deed. Simply removing a name from the deed does not automatically remove liability from the mortgage.
If one party keeps the home, a formal transfer of title is required, and ideally, refinancing should be done to remove the other party from financial responsibility. Title companies need legal documentation before proceeding with changes related to divorce settlements.
Check for Unrecorded Agreements or Use Rights
Not all rights affecting a property are recorded. Examples include handshake agreements with neighbors for shared driveways, fences placed off-boundary, or verbal use permissions.
Disclose any known off-record arrangements during escrow. While not recorded, these can lead to future disputes or legal issues. Title insurance won’t cover unrecorded matters unless they are disclosed, so proactive communication is key.
Watch for Delinquent Property Taxes
Unpaid property taxes become a lien against the property and can take priority over other liens—including mortgages. This makes them a major concern for buyers and lenders.
Always check the tax status early in escrow. Title companies will verify this and require any delinquencies to be paid before closing. Explaining the priority of tax liens helps clients understand why they must be resolved before transferring ownership.
Be Mindful of Boundary and Survey Issues
Boundary disputes can arise when fences, structures, or landscaping encroach over property lines—often unknowingly. These issues may not be discovered through a basic title search alone.
Consider a survey, especially for older properties, large lots, or when improvements are near the edge of the property. Title insurance may not cover unrecorded encroachments unless disclosed or identified. Being proactive can prevent legal headaches down the road.
Understand the Role of a Lien Release
When a debt secured by real property (like a mortgage or tax lien) is paid off, a lien release (also called a reconveyance or satisfaction of lien) must be recorded to officially remove the lien from the property's title.
Paying off a loan doesn’t automatically clear it from public records. The lender or lienholder must record the release. Title companies verify this during escrow to ensure the buyer receives clear title without unexpected obligations.
Be Cautious with Power of Attorney (POA) Expiration or Revocation
A Power of Attorney can expire by its own terms, be revoked by the principal, or terminate upon the principal’s death or incapacity (unless it’s a durable POA).
When a POA is being used in a real estate transaction, the title company must verify that it’s valid and in effect. Always submit the POA early in escrow for review, and make sure no events (like death or revocation) have invalidated it to avoid closing delays.
Understand the Difference Between Insurable Title and Marketable Title
Marketable title is a title free from significant defects, making it readily acceptable to a reasonable buyer. Insurable title means a title insurance company is willing to insure over certain defects, even if the title isn’t perfect.
In some cases, a buyer may accept insurable title if the title company covers the risk, but it's important to know the difference. Always review what’s being insured versus what’s being excluded to avoid surprises after closing.
Understand What a Subdivision Map Act is
The Subdivision Map Act governs how land can be divided in California and ensures that parcels are legally created with proper access, utilities, and compliance with zoning laws.
If a property was improperly subdivided without local government approval, title companies may refuse to insure it. Always verify that any land division—especially with vacant lots or multi-parcel deals—was done legally to avoid major title and resale issues later.
Understand What a “Notice of Default” (NOD) Means
A Notice of Default is the first formal step in the foreclosure process. It’s recorded when a borrower misses several mortgage payments, alerting the public and initiating the legal path toward foreclosure.
An NOD can impact a property's marketability and shows up in the title search. If your client is buying a property in default, they should be aware of timing, redemption rights, and the risk of the trustee sale. This is also key information when working with distressed properties or investors.
Know the Risks of Unrecorded Deeds
A deed that is signed but never recorded with the county recorder’s office may still be valid between the parties—but it does not provide public notice of the transfer, which can lead to legal disputes or fraud.
Recording the deed protects their ownership rights and gives public notice of their interest. Title companies require deeds to be recorded to ensure clear title and prevent hidden claims down the road.
Check for Zoning and Use Restrictions in Title Documents
Zoning laws and recorded use restrictions can limit how a property may be used—affecting everything from residential versus commercial use to the type of structures allowed.
While zoning is typically handled through the city or county, recorded restrictions may appear in the title report. These can impact future development, remodel plans, or business use. Always review for any use limitations that could affect a buyer’s intended purpose.
Understand the Impact of Pending Lawsuits (Lis Pendens)
A Lis Pendens is a recorded notice that a property is subject to a pending lawsuit which may affect its title—such as disputes over ownership, boundaries, or contractual rights.
When a Lis Pendens appears on title, it creates uncertainty and can freeze the transaction until the legal matter is resolved or dismissed. Always flag this early for your clients and work closely with the title company to assess risk and potential solutions.
Know What an Assessor’s Parcel Number (APN) Is
The APN is a unique number assigned by the county assessor to identify each parcel of real property for taxation and record-keeping purposes. It’s often included in title reports and legal documents.
The APN is helpful for searching public records, ordering reports, and verifying the property’s location and size. However, it should never replace the legal description in a deed or title document. The APN supports—but does not define—ownership.
Be Aware of “Transfer Tax” in Real Estate Transactions
Transfer tax, also known as documentary transfer tax, is a fee imposed by the county (and sometimes city) when real property changes ownership. It's usually calculated based on the sales price and paid at recording.
Who is responsible for paying the transfer tax—it can vary by county, city, or terms of the sale. It’s often overlooked but can be a significant closing cost. Title and escrow teams will calculate and collect it to ensure compliance at recording.
Understand the Purpose of a Preliminary Title Report (Prelim)
A preliminary title report is a detailed statement issued early in escrow that shows the current state of the title, including ownership, liens, easements, taxes, and any exceptions to title insurance coverage.
The prelim is not a policy—it's a preview of what the title company would insure if the deal closes. It allows all parties to review and resolve any title issues in advance. Always review it closely, especially “Schedule B” items that outline exclusions.
Check for Multiple Parcel Numbers in One Transaction
Some properties span more than one Assessor’s Parcel Number (APN), meaning they legally consist of multiple parcels. This is common with larger lots, corner properties, or when adjacent parcels were purchased together.
Always verify how many parcels are involved and ensure they’re all included in the contract, title search, and insurance policy. Overlooking an extra parcel can lead to serious issues with ownership, taxes, or financing after closing.
Be Cautious with Unpermitted Improvements
If previous owners made additions or alterations to the property without proper permits, it can lead to future problems with insurance, financing, resale value, or even city enforcement.
While unpermitted work might not always appear in the title report, it can become a title issue if a claim arises or if the work violates property lines or easements. Encourage buyers to ask questions, review seller disclosures carefully, and check with the local building department if needed.
Watch for “Shared Driveway” Agreements or Easements
When two or more properties share a driveway, there may be a recorded easement or maintenance agreement that defines each party’s rights and responsibilities.
Lack of a formal agreement can lead to disputes down the road. If a shared driveway is discovered, check the title report for recorded terms. If nothing is recorded, advise clients to seek a written agreement before closing to avoid future legal complications.
Know When an Entity Needs Extra Documentation
When a property is being bought or sold by a business entity—like an LLC, corporation, or trust—the title company will require additional documents such as Articles of Incorporation, Operating Agreements, or Trustee Certifications.
Always identify early if a party is an entity and get the necessary paperwork submitted. Title companies need to confirm who has signing authority to avoid delays or rejections at closing. This step is critical in commercial deals and increasingly common in residential ones too.