A title preliminary report is the single most important document in a real estate transaction that buyers do not read carefully. The closing agent hands it over with a stack of disclosures, the buyer signs, and weeks later they discover an easement they did not know about, an unreleased deed of trust, or a CC&R that bans the ADU they were planning to build.
I have closed enough transactions to know the pattern. The exceptions in Schedule B-II of a prelim are not boilerplate. They are the title insurer telling you what risks they will not cover. Reading and pushing back on them is the buyer's job, and most buyers skip it.
Below is what a preliminary title report actually is, what it costs in 2026, what to look for, and how to handle the common red flags before they become closing problems.
Quick facts: title prelims in 2026
| Item | Detail |
|---|---|
| Typical cost | $75-$350 residential, $400-$1,000 complex |
| Often included in | Title insurance and escrow fee bundle |
| Top underwriters | First American, Fidelity, Old Republic, Stewart |
| Combined market share | Big Four hold over 65% of US market |
| Legal status | Informational, not a binding commitment |
What a preliminary title report actually is
A title preliminary report (sometimes "title commitment," depending on state) is the title insurer's offer to issue a policy at closing, subject to listed exceptions. Three things to know:
1. It is not a guarantee of clear title. It is an offer to insure subject to specific exceptions and requirements. Only the issued policy provides actual coverage.
2. The exceptions section is the document. Schedule B-II lists what the insurer will NOT cover. This is where easements, CC&Rs, mineral rights, unreleased liens, and survey matters live. Read this section first.
3. State terminology varies. California, Oregon, Washington, and Arizona use "preliminary report." Most other states use "title commitment." The legal nuances differ slightly. In California, a prelim has explicitly limited liability under Insurance Code 12340.11. A title commitment in Texas is a binding offer with stricter contract obligations.
If the listing is in California, you get a prelim. If it is in Texas, you get a commitment. Same document family, slightly different legal weight.
Standard exceptions vs special exceptions
The exceptions section has two parts:
Standard exceptions (Schedule B-I or pre-printed): Apply to every property the insurer covers in that jurisdiction. Common ones: rights of parties in possession, unrecorded easements, survey matters, mechanics' liens not yet recorded, taxes for the current year. Removable by purchasing extended/ALTA coverage and providing a current survey.
Special exceptions (Schedule B-II): Specific to this property. Recorded easements, CC&Rs, HOA assessments, existing deeds of trust, judgments, tax liens, lis pendens. The buyer must review each one and either accept it, negotiate its removal, or walk from the deal.
The single biggest mistake buyers make is assuming standard exceptions are immovable and special exceptions are immovable. Both are negotiable in many cases. A good title agent or real estate attorney can advise which to push back on.
Six red flags worth investigating
1. Unreleased deeds of trust from prior owners: A previous mortgage that was paid off but never formally released still shows in title. The seller must produce a release, or the title company will require one before issuing the policy. This is fixable but takes weeks.
2. Mechanics' liens or pending litigation (lis pendens): A contractor who was not paid can file a mechanics' lien. A pending lawsuit involving the property creates a lis pendens. Both attach to the property, not the seller. Buyers inherit them at closing if not cleared.
3. CC&Rs that restrict use: HOA covenants can ban short-term rentals, ADUs, RV parking, fences over 6 feet, and many other things. If your plan for the property requires any of these, read the CC&Rs in full before closing. Most buyers do not.
4. Easements crossing buildable areas: A utility easement across the back yard can prevent you from putting a pool there. A drainage easement can flood the yard during heavy rain. Easements show in the prelim. Cross-reference with the survey.
5. Tax-sale or HOA-foreclosure history: Prior tax-sale proceedings or HOA foreclosure attempts can leave clouds on title. The title company will research and resolve these, but they signal a property with financial distress.
6. Boundary or encroachment exceptions flagging missing survey: If the prelim notes "rights of parties in possession" or boundary line uncertainty, get a current survey. Without one, you are buying based on the seller's word about what you own.
Pricing in 2026
Title prelim costs in 2026:
- Residential standard: $75-$350 in most US markets
- Residential complex (high value, multi-parcel, history of issues): $400-$1,000
- Commercial: $500-$5,000+ depending on complexity
- Often bundled: Many lenders and escrow companies include the prelim cost in the title insurance and escrow fee bundle
Pricing is state-regulated in Texas, New Mexico, and Florida (promulgated rates). Shopping there focuses on agent service, not premium. In other states there is room to negotiate.
The Big Four underwriters in 2026
Q1 2025 market share data (most recent published):
- First American Title: 22.9% (largest single underwriter)
- Fidelity National Financial: 14.1%, plus 12.9% via Chicago Title (total ~27%)
- Old Republic Title: 14.0%
- Stewart Title: 9.2%
Combined, the Big Four hold over 65% of the US title insurance market. With Chicago Title rolled in, Fidelity National commands roughly 27% alone. For most buyers, the underwriter choice is effectively four options.
What matters more than underwriter choice is agent service. Title agents handle the exception research, communication with sellers, and timeline management. A good agent saves weeks of closing delays.
How to handle a problematic prelim
The workflow when red flags appear:
1. Review with a real estate attorney, not just the title agent. The agent works for the title company. The attorney works for you.
2. Identify which exceptions you can live with vs which need to be cleared. Standard exceptions for known easements you accept. Unknown easements, unreleased liens, and pending litigation should be cleared before closing.
3. Negotiate clearance with the seller. The seller is responsible for providing clear title. If a deed of trust is unreleased, the seller chases the release. If a lien exists, the seller pays it off at closing.
4. Use the inspection or contingency period. Most purchase contracts have a contingency period that includes title review. Walk if the issues are serious enough, before earnest money is at risk.
5. Buy extended coverage if standard exceptions concern you. Standard exceptions like "rights of parties in possession" can be removed with extended (ALTA) coverage and a current survey. Costs $200-$500 extra typically.
FAQ
How much does a title preliminary report cost in 2026?
$75-$350 for typical residential properties, $400-$1,000 for complex or high-value transactions, $500-$5,000+ for commercial. Often bundled into the title insurance and escrow fees.
Is a title preliminary report the same as a title commitment?
Not quite. A prelim is informational with limited contractual liability. A title commitment is a binding offer to issue a policy. Most western states (CA, OR, WA, AZ) use "prelim." Most other states use "commitment." The documents are similar but the legal weight differs.
What should buyers look for in a prelim?
Schedule B-II (special exceptions). Look for unreleased deeds of trust, mechanics' liens, lis pendens, CC&Rs that restrict use, easements crossing buildable areas, and missing survey notes. Each one needs review.
Who pays for the title preliminary report?
Varies by region and contract. In California, often the seller pays. In Texas, the buyer typically pays. In commercial deals, the buyer almost always pays. Read the purchase agreement.
Can I negotiate exceptions out of a prelim?
Yes, sometimes. Standard exceptions can often be removed with extended coverage and a current survey. Special exceptions like unreleased deeds of trust must be cleared by the seller before closing. CC&Rs and recorded easements are usually not removable but can be negotiated for price reduction.
Sources and further reading
- need a report when buying a house
- Redfin’s explanation of preliminary title reports
- Opendoor’s overview of what a preliminary title report includes
- due diligence checklist for real estate
- SoFi guide on reading a preliminary title report
- best legal tech tools
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