Escrow & TitleIntermediateCalifornia Exam

What is a preliminary title report?

AA guarantee of title insurance coverage, as typically handled by an escrow officer

BA report showing the current status of title and any exceptions before issuing a title policyCorrect

CA property inspection report, consistent with standard title insurance practice

DA lender's appraisal of the property, per customary closing procedure in California

Why A report showing the current status of title and any exceptions before issuing a title policy Is Correct

Answer B: A report showing the current status of title and any exceptions before issuing a title policy

A preliminary title report (prelim) is prepared by the title company showing the current status of title, existing liens, encumbrances, easements, and exceptions that would be excluded from the title policy. It is not a guarantee of title.

Exam Tip: Escrow & Title

Escrow questions test the neutral third-party role and the sequence of closing events. Remember that the escrow agent acts as a dual agent for both buyer and seller and cannot advocate for either side.

Key Escrow & Title Terms in This Question

Appraisal

A professional estimate of a property's market value prepared by a licensed or certified appraiser.

Easement

A non-possessory right to use another person's land for a specific purpose.

Encumbrance

Any claim, lien, charge, or liability attached to real property that affects its value or limits its use.

Lien

A financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.

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Key Terms to Know

Title Insurance

Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.