Title insurance companies spend hundreds of millions of dollars each year to correct errors in the public property records that otherwise would lead to serious impairment to the property rights of millions of Americans.

Errors are uncovered by trained experts: Title Officers. Title officers provide the results of their search by either a preliminary report or commitment for title insurance.

A preliminary report (frequently referred to as a "prelim") is a report which shows the terms upon which the Company may issue its policy. It is neither a policy nor a commitment to issue a policy. It is an offer to issue a policy provided all terms are met.

The preliminary report includes both items and notes:

• Items are both exceptions to title, the reporting of recorded documents that describe/affect the property in question, and requirements which most often are requests for information that will enable the Company to issue the policy requested.
• Notes are purely informational. Some supply information for proration purposes, while others contain information that might be required either by the state or by the Company.

The preliminary report is issued after the search and examine procedure has been completed. Next month we will discuss what a commitment for title insurance is.

NOTE: The statements made in this article are not intended to and shall not be construed to expressly or impliedly issue or deliver any form of written guaranty, affirmation, indemnification or certification of any fact, insurance coverage or conclusion of law.