How to Read a Preliminary Title Report

When you're buying property in Utah, one of the most important documents you'll receive is the preliminary title report. Yet many buyers simply glance at it or skip it entirely, trusting that someone else has reviewed it. That's a costly mistake. Your preliminary title report is essentially a roadmap showing you exactly what you're buying—and more importantly, what problems might come attached to your new property.

Whether you're purchasing a home in Salt Lake City, land in Southern Utah, or commercial property in Provo, understanding how to read your title report empowers you to spot issues early, ask the right questions, and avoid surprises at closing. This guide breaks down every section of a preliminary title report in plain language, shows you what to look for, and explains how to address common problems.

What Is a Preliminary Title Report and Why Does It Matter?

A preliminary title report (often shortened to "prelim" in real estate circles) is a comprehensive document that your title insurance company produces after conducting a detailed search of public records. The report serves several critical purposes: it confirms who currently owns the property, provides the legal description that will appear on your deed, and—most importantly—reveals any clouds on the title that could affect your ownership rights.

In Utah, preliminary title reports are typically issued within 3-7 days after your title company receives your purchase agreement. The title examiner searches records at the county recorder's office where your property is located—whether that's Salt Lake County, Utah County, Washington County, Davis County, or one of Utah's other 25 counties. They're looking for recorded documents that affect your property: deeds, mortgages, liens, judgments, easements, restrictions, and more.

Unlike the final title policy, which insures your ownership after closing, the preliminary report is a snapshot of the title's current condition. It tells you what needs to happen between now and closing day. Think of it as a diagnostic test before surgery—it identifies the problems so they can be fixed before you proceed.

How to Read Schedule A: The Foundation of Your Title Report

Schedule A is the first substantive section of your preliminary title report, and it establishes the basic facts about the property and the transaction. While it might seem straightforward, each element deserves careful attention because errors here can create serious complications.

The legal description is particularly critical. In Utah, legal descriptions typically follow one of several formats: the Public Land Survey System (township, range, section), metes and bounds (for irregular parcels), or lot and block (for platted subdivisions). Don't just assume it's correct—verify that the address and description match the property you actually toured and agreed to purchase. Buying the wrong lot or getting a description that inadvertently excludes part of the property are rare but devastating errors.

Pay attention to how the current owner holds title. Common vesting types in Utah include sole ownership, joint tenancy, tenancy in common, and community property (though Utah is not technically a community property state, it recognizes such holdings). This matters because it determines who must sign the deed to transfer valid title to you.

Understanding Schedule B-I: Requirements That Must Be Cleared

Schedule B-I is where the work happens. This section lists every requirement that must be satisfied before your title company will issue a final title insurance policy. These aren't suggestions—they're mandatory conditions. Your closing cannot proceed until every item on Schedule B-I is completed or waived.

Common requirements you'll see in Utah title reports include:

• Payoff of seller's mortgage: The seller's existing loan must be paid in full and a reconveyance deed recorded showing the lien is released. In Utah, this is typically handled at closing with funds from your purchase price.
• Release of judgments or liens: Any judgments against the seller, tax liens, mechanics liens, or HOA liens must be satisfied and released of record.
• Execution and recording of your deed: The seller must sign a warranty deed or special warranty deed conveying title to you, and it must be recorded with the county.
• Payment of property taxes: All property taxes must be current, with any outstanding amounts prorated between buyer and seller at closing.
• Association documents: If the property is in an HOA, you may need to provide proof of estoppel (showing dues are current) and sometimes sign documents acknowledging the CC&Rs.
• Gap coverage: The title company typically requires certain documents or affidavits to cover the "gap" period between the final search and when your deed records.

Your title company and closing agent work together to ensure each requirement is met. The seller is typically responsible for clearing items related to their ownership (paying off their mortgage, clearing their judgments), while you're responsible for items related to your purchase (providing funds, signing your deed). However, purchase contracts can allocate these responsibilities differently, so review your agreement carefully.

Decoding Schedule B-II: Exceptions to Your Title Insurance Coverage

Schedule B-II is perhaps the most important section for you to understand because it defines the limits of your title insurance protection. Everything listed in Schedule B-II will NOT be covered by your owner's title insurance policy. These items will remain attached to the property after closing, and you'll take ownership subject to them.

Standard exceptions found in virtually every Utah preliminary title report include:

• Property taxes and assessments: You'll be responsible for paying ongoing property taxes. Delinquent taxes from prior years should be handled in Schedule B-I, but future taxes are always an exception to coverage.
• Rights of parties in possession: If someone is physically occupying the property (such as a tenant), their rights are excepted from coverage. Make sure any tenants are disclosed and that you have a plan for their lease.
• Easements of record: Utility easements, access easements, drainage easements, and similar rights that allow others to use portions of your property remain in place and are excepted from coverage.
• CC&Rs (Covenants, Conditions, and Restrictions): If the property is in a subdivision or HOA, the recorded restrictions on how you can use the property are excepted. These might limit everything from paint colors to whether you can have a home business.
• Water rights issues: In Utah, water rights are often separate from land ownership. Schedule B-II typically excepts any water right claims, requiring you to independently verify what water rights (if any) convey with the property.
• Mineral rights reservations: Previous owners may have reserved mineral rights, meaning you own the surface but not what's underneath. This is particularly common with older properties or those in rural Utah.

Read every exception carefully and make sure you understand what it means for how you intend to use the property. For example, a utility easement across the back of your lot might not matter if you were planning a garden there—but it could be a dealbreaker if you wanted to build a shop in that exact spot.

What Are the Biggest Red Flags in a Title Report?

While most preliminary title reports contain routine, manageable items, some raise serious concerns that require immediate attention. After working with Utah properties for decades, Prospect Title has identified the most problematic issues that buyers should watch for:

• Undisclosed liens: Tax liens, judgment liens, or mechanics liens that the seller didn't mention could indicate financial distress or disputes. Large liens might mean the seller doesn't have enough equity to clear them at closing.
• Clouds on title from prior transactions: Missing signatures on old deeds, improperly recorded documents, or gaps in the chain of title can cloud ownership. These require curative work that may delay closing significantly.
• Pending litigation: A lis pendens (notice of pending lawsuit) affecting the property is a major red flag. It means someone is suing over the property, and the outcome could affect your ownership.
• Easements that impair use: While most easements are minor, some can severely restrict how you use the property—such as a neighbor's easement to use your driveway or a pipeline easement preventing any building in a large area.
• Boundary or encroachment issues: If the report mentions boundary disputes, encroachments, or recommends a survey, take this seriously. Your neighbor's fence, shed, or driveway might be on your property—or vice versa.
• Missing or inadequate legal description: Vague or incorrect legal descriptions can cause ownership disputes or make it impossible to determine what land you're actually buying.
• Unknown heirs or probate issues: If the property is being sold by an estate and there's any question about whether all heirs have been identified or whether probate was properly completed, this creates risk of future ownership claims.

How to Clear Title Exceptions Before Closing

Once you've identified issues in your preliminary title report, the next question is: how do we fix them? The process for clearing title exceptions varies depending on the type of problem, but here's how the most common issues are resolved in Utah:

Mortgage and lien payoffs: The seller's mortgage lender provides a payoff statement showing the exact amount needed to release the loan. At closing, funds from the purchase price go directly to the lender, and they record a reconveyance deed (for deeds of trust) or satisfaction (for mortgages) releasing the lien. For tax liens or judgment liens, similar payoffs are arranged with the taxing authority or creditor. These are usually straightforward if the seller has sufficient equity.

Judgment releases: If the seller has a judgment against them, it must be paid or bonded around. Sometimes judgments can be negotiated for less than the full amount, but this takes time and cooperation from the judgment creditor. In cases where the judgment is very old or the creditor can't be located, your title company might be able to insure over it based on age and the facts.

Mechanics liens: Construction-related liens from contractors or suppliers require careful handling. If the work was done for the current owner, they must pay the lien. If the lien is invalid (filed too late, excessive amount, improper notice), it may need to be challenged. Utah's mechanics lien laws are specific and time-sensitive, so resolution often requires legal assistance.

Easement modifications: If an easement is particularly problematic, you might negotiate with the easement holder to relocate, narrow, or terminate it. This requires agreement from all parties and recording of new documents. More often, buyers simply accept easements as a normal part of property ownership.

Boundary disputes and encroachments: When surveys reveal issues, solutions range from simple (neighbors sign boundary line agreements) to complex (quiet title actions in court). Your title company can often insure over minor encroachments, but significant disputes may require legal resolution before you can close.

Chain of title defects: Missing signatures, improperly executed deeds, or gaps in the ownership chain require curative work. This might involve tracking down prior owners to execute corrective deeds, obtaining court orders, or using quiet title actions to clear up the record.

What Happens Between Receiving the Prelim and Closing?

The preliminary title report kicks off a coordinated effort between your title company, closing agent, real estate agents, and attorneys (if applicable) to clear all the requirements and prepare for closing. Here's what typically happens in Utah during this period:

Week 1: Title report review and issue identification. You receive the prelim and review it (ideally with your agent and title officer). Any questions or concerns are raised immediately. Your title officer confirms which items are standard and which need special attention.

Week 2-3: Curative work. The title company obtains payoff statements, coordinates with lienholders for releases, orders surveys if needed, and works to resolve any title defects. The seller works with their attorney or agent to clear items they're responsible for. You provide any required documentation or funds.

Week 3-4: Final preparations. As closing approaches, the title company prepares the final title policy (which will replace the preliminary report), the settlement statement showing all funds, and the deed that will transfer ownership to you. They conduct an updated search to ensure no new liens or issues have appeared since the preliminary report.

Closing day: Final update and recording. On the day of closing, the title company does a final update to the title search (covering the gap between the last search and closing time). After everyone signs documents and funds are confirmed, the deed and other documents are delivered to the county recorder's office. Once recorded, your ownership is official and your title insurance policy is issued.

Utah-Specific Title Report Considerations

While preliminary title reports follow a general format nationwide, Utah has some unique characteristics that affect how title reports look and what issues commonly appear:

Water rights are critical and complex. Utah is a prior appropriation state, meaning water rights are separate from land and based on first-in-time, first-in-right. Your preliminary title report will typically except water rights from coverage entirely, meaning you need to independently verify what water comes with the property—especially important for agricultural land, larger lots, or properties with wells. Don't assume you have the right to use water just because a well or irrigation shares exist on the property.

Mineral rights are often reserved. It's common for Utah deeds, particularly older ones or those involving federal land patents, to contain mineral reservations. Your title report will show if previous owners reserved mineral rights. While this rarely affects residential homeowners, it's essential information if you have development plans or if mineral extraction becomes viable in your area.

HOA and subdivision restrictions are extensive. Utah has thousands of planned communities and HOAs with detailed CC&Rs. These restrictions can govern everything from architectural standards to business operations to pet ownership. Your title report lists the recorded CC&Rs, but it's up to you to obtain and read the actual documents. Many HOAs also have unrecorded rules and regulations that won't appear on the title report but are still enforceable.

County recording practices vary. Utah's 29 counties have different levels of digitization and recording efficiency. Salt Lake County, Utah County, and Davis County have modern online systems that allow same-day recording and searching. More rural counties may still rely partly on physical records and take longer to record documents or respond to information requests. This affects how quickly your title search can be completed and how current the information in your prelim is.