Journal ·
What Does a Preliminary Title Report Actually Cover in California?
Short answer: a California preliminary title report is an offer to issue a title policy on stated terms. It is not a statement that your title is good. State law says that in one sentence, and the sentence is the reason a prelim can be clean on Tuesday and a lien can attach on Thursday with priority dating back months.
What does the law say a preliminary title report is?
Insurance Code section 12340.11 defines the term, and the wording is unusually direct. Preliminary reports, commitments and binders "are offers to issue a title policy subject to the stated exceptions set forth in the reports." The section then adds that the reports "are not abstracts of title," and that any such report "shall not be construed as, nor constitute, a representation as to the condition of title to real property," but rather "a statement of the terms and conditions upon which the issuer is willing to issue its title policy, if such offer is accepted."
Three consequences follow. The exceptions list is the product. The company owes you nothing on the report itself until a policy issues. And the list of what is excluded is more informative than the list of what is shown.
Why does a prelim only show recorded matters?
Because recording is what creates notice to the world. Civil Code section 1213 provides that a conveyance recorded as prescribed by law is, from the time it is filed with the recorder for record, constructive notice of its contents to subsequent purchasers and mortgagees.
That single mechanism defines the search. A title officer runs the chain of title through the county recorder, in Los Angeles County the Registrar-Recorder/County Clerk, and reports what the record shows. Anything never recorded is outside the chain and therefore outside the report, no matter how real it is on the ground.
What are the biggest things a preliminary report will not tell you?
Four categories account for most surprises.
Rights of parties in possession. A tenant with an unrecorded lease, or a neighbor using a strip of ground, leaves no record trace. A physical walk of the property is the only way to see it.
Boundary and encroachment questions. The report describes the parcel by legal description. It does not measure where the fence sits. Los Angeles County Assessor parcel maps, available through the Assessor's office, are useful for orientation and are not a survey.
Work already underway. This is the one that surprises buyers, and it has its own section below.
Governmental limits. Zoning, permit history and code compliance are not title matters. They are city matters, and in Burbank they sit with the Planning division of the Community Development Department, not with the title company. Hazard designations are a separate disclosure track again, covered in the natural hazard disclosure explainer.
How can a lien recorded after closing outrank my deed?
Through relation back. Civil Code section 8450 provides that a mechanics lien has priority over a lien, mortgage, deed of trust or other encumbrance that attaches after commencement of the work of improvement.
Read that against the clock. If a contractor started work on the house in March, the buyer's deed and the lender's deed of trust record in July, and an unpaid subcontractor records a claim of lien in September, the lien's priority is measured from the March commencement of work, not from September. The prelim in June could not have shown it, because nothing was recorded in June.
The filing windows are short and they are not the same for everyone.
| Claimant | Deadline, whichever comes first |
|---|---|
| Direct contractor, Civ. Code 8412 | 90 days after completion of the work, or 60 days after the owner records a notice of completion or cessation |
| Everyone else, including subcontractors and suppliers, Civ. Code 8414 | 90 days after completion of the work, or 30 days after the owner records a notice of completion or cessation |
The 30 day figure for subcontractors against 60 days for the direct contractor is the detail most summaries flatten into one number. Getting it wrong by thirty days is the difference between a closed risk and an open one.
What should I actually read in the report?
Schedule B, and read it line by line.
- Confirm the vesting matches the seller named in the contract. A trust, an estate or an added spouse changes who has to sign.
- Read every exception, then request the underlying recorded document for any exception you do not understand. Exceptions are listed by instrument number, and the document itself is what binds you.
- Check for easements that cross buildable area, not just easements that exist. Position is what limits an addition or an ADU.
- Look for CC&Rs and identify the enforcing body. A homeowners association with architectural review changes what you can build.
- Check the taxes and assessments exception against the current secured tax bill, including the direct assessment lines. The Los Angeles County Auditor-Controller Direct Assessment Contact List identifies the agency behind each abbreviated line.
- Note the effective date of the report. Everything recorded after it is unexamined.
What is the difference between standard and extended coverage?
Standard coverage, the CLTA form, insures against recorded defects and takes exception for the categories that a record search cannot see: rights of parties in possession, unrecorded easements, and matters a correct survey would disclose.
Extended coverage, the ALTA form typically required by a lender, removes some of those general exceptions in exchange for a survey or an inspection and a higher premium. Two policies are commonly issued in the same transaction, one for the lender and one for the owner, and they do not cover the same things. Ask which one protects you personally, since the lender's policy protects the lender's lien and stops there.
When does the report arrive, and how long do I have?
In a standard California residential purchase the preliminary report is delivered early in escrow, which is why review time gets compressed against the same calendar as inspections and loan approval. The wider timeline is covered in how long escrow takes in California.
One practical habit: order the underlying documents on day one rather than after reading the exceptions. Retrieval takes time, and a recorded easement you cannot read is not information yet.
Q: Is a preliminary title report the same as title insurance?
No. Insurance Code 12340.11 describes the report as an offer to issue a policy. Coverage exists only when a policy issues. The report itself creates no liability for the condition of title.
Q: Does a clean preliminary report mean the property has no liens?
It means no lien was recorded and indexed as of the report's effective date. Unrecorded claims and work already commenced can sit outside it, and under Civil Code 8450 a later lien can take priority from an earlier date.
Q: Who pays for the title policy in Los Angeles County?
Allocation of the owner's policy and escrow fees is negotiated in the purchase agreement and varies by county custom and by transaction. Treat it as a term to negotiate rather than a fixed rule, and get the allocation in writing.
Q: Can I object to items in the preliminary report?
Objection rights come from your purchase agreement, usually through a title review contingency with a stated number of days. The statute does not supply one. Confirm your deadline in writing before removing any contingency.
Q: What is a notice of completion and why does it matter to a buyer?
It is a document the owner records after work finishes. Recording it shortens the lien window from 90 days to 60 days for the direct contractor and to 30 days for everyone else. If recent work happened at the property, whether one was recorded changes how long the exposure lasts.
This article is general information about California statutes and public records, not legal or insurance advice. Confirm the specifics of any report with your title officer and, where the stakes justify it, with an attorney. Call Alla at (818) 699-5367 or use the enquiry form.
More on buying in this market in the Burbank area guide.