Escrow & TitleIntermediateCalifornia Exam

What is a 'preliminary title report' (prelim)?

AA report on the property's physical condition, consistent with standard title insurance practice, under standard California escrow and title practice, consistent with customary closing procedure

BA report issued by a title company showing the current state of title to a property, including all liens, encumbrances, and exceptions, before issuing title insuranceCorrect

CA report summarizing all offers received on a property, per customary closing procedure in California, under standard California escrow and title practice, consistent with customary closing procedure

DA report of the property's HOA finances, under standard California escrow and title practice, consistent with customary closing procedure

Why A report issued by a title company showing the current state of title to a property, including all liens, encumbrances, and exceptions, before issuing title insurance Is Correct

Answer B: A report issued by a title company showing the current state of title to a property, including all liens, encumbrances, and exceptions, before issuing title insurance

A preliminary title report (prelim) is prepared by a title company and discloses all recorded matters affecting the title to a property: liens, encumbrances, easements, CC&Rs, and other exceptions that will not be covered by the title insurance policy. Buyers and lenders review the prelim before closing.

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

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.

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.

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