Understanding the Preliminary Title Report

When you buy a home, you're not just acquiring the physical property — you're acquiring the legal right to own it. The Preliminary Title Report is how the title insurance company confirms that the sellers actually hold that right to transfer, and that no outstanding claims, liens, or encumbrances would interfere with your clean ownership after closing.

What the Title Report Examines and Why Each Element Matters

1. 1Current vesting — Confirms who the legal owners are and how they hold title. This is especially important when ownership involves trusts, estate situations, or multiple parties — where authority to sell must be clearly established before a transaction can proceed.
2. 2Legal description — The precise parcel description as recorded at the Bureau of Conveyances — distinct from and more authoritative than the street address. Discrepancies between the legal description and what you understood you were buying occasionally surface here.
3. 3Liens and financial encumbrances — Outstanding mortgages, tax liens, mechanic's liens, or court judgments recorded against the property. These must be paid off and discharged at or before closing before title can transfer cleanly to you.
4. 4Easements and use restrictions — Rights others hold to use a portion of the property — utility corridors, shared driveways, drainage easements, or access paths. These survive ownership changes and affect how you can use and develop the property.
5. 5Owner's title insurance — Protects you from financial loss arising from title defects that weren't discovered during the search. In Hawaii, this is a standard and strongly recommended purchase — your escrow officer will walk you through your coverage options.