Ever opened a preliminary title report and felt lost in the legal jargon? If you are buying or selling in East Side Costa Mesa, that packet of pages can look intimidating. You want a clean, timely closing, and understanding your prelim is a smart way to protect your plans and your budget. In this guide, you will learn what a prelim is, how to read each section, the local red flags to watch for in Costa Mesa, and the simple steps to resolve issues. Let’s dive in.
What a prelim is and why it matters
A preliminary title report is the title company’s snapshot of the public-record status of a property. It comes early in escrow and shows what the title company is willing to insure, plus the requirements you must meet before it issues the final title policy.
It is not a title insurance policy. The prelim outlines conditions that must be satisfied and lists exceptions the policy will not cover. It is based on recorded documents as of the report’s effective date and does not reveal unrecorded claims, physical encroachments, or unpermitted work.
You will typically see the prelim ordered by your escrow, lender, or agent soon after you open escrow. It may be updated during the process as liens are paid off or new documents are recorded.
How to read the prelim
Cover page and property ID
Look for the property address and the assessor’s parcel number (APN). Confirm they match your purchase contract. Note the report date and effective date. Anything recorded after that date will not appear.
Schedule A: Who owns what
Schedule A shows how the current owner holds title, the proposed policy amounts, and the legal description. Verify that the vesting matches the seller and that the legal description aligns with the boundaries you expect. If the property is in a trust or corporation, transfer steps may differ.
Schedule B-1: Requirements to close
This section lists what must happen before the title company will issue a policy. Common items include:
- Payoff and reconveyance of existing deeds of trust
- Releases of any judgment, tax, or IRS liens
- Proof that property taxes are current or properly prorated
- HOA estoppel or condo documents when applicable
- Identification, escrow instructions, or other recordable documents
Ask your title officer to explain each requirement and who is responsible for clearing it.
Schedule B-2: Exceptions that remain
B-2 lists recorded matters the title company will not insure against unless removed or specially endorsed. Common exceptions include easements, CC&Rs, rights-of-way, setback lines, mineral reservations, recorded leases, and any liens or lawsuits that appear of record. Standard exceptions also include taxes not yet due and matters recorded after the effective date.
Most exceptions reference a recorded document number and date. Request copies and read them, especially if you plan renovations or an ADU.
Local items to watch in East Side Costa Mesa
Common recorded matters
You can expect to see mortgages or deeds of trust that need payoff, CC&Rs for planned developments or condos, and utility or access easements. Special assessments may also appear through the tax bill.
Neighborhood considerations
East Side Costa Mesa is primarily residential. Older subdivisions sometimes have alley or shared-access easements. Condominiums often require HOA estoppel letters and transfer documents. If you plan to remodel or add an ADU, remember that the prelim will not show unpermitted improvements. Pair your title review with a permit history check through the City of Costa Mesa Planning and Building Division.
Specific exceptions to review closely
- Judgment, tax, or IRS liens
- Mechanics’ liens recorded before close
- Unreleased deeds of trust from prior owners
- Building setback lines that impact additions or garage conversions
- Easements that limit the location of new improvements
- Any rare mineral or subsurface reservations
If any of these appear, ask your title officer how they will be cleared or insured over.
Buyer checklist: Use your prelim wisely
- Confirm the APN, legal description, and owner vesting against your contract.
- Read every B-2 exception. Request copies of CC&Rs, easements, and any referenced documents.
- Ask for payoff amounts and the reconveyance plan for any loans and liens.
- If a condo or HOA, obtain an HOA estoppel and confirm dues, assessments, and transfer fees.
- Discuss endorsements that might help, such as a survey or measurement endorsement.
- Complete due diligence outside the prelim: inspections, permit history, and a flood hazard check.
Seller checklist: Clear issues early
- Provide loan payoff details, HOA documents, and prior title paperwork promptly.
- Work with escrow to clear recorded judgments or liens early in the process.
- Coordinate with your lender to ensure reconveyance documents are ready at closing.
Clearing exceptions and getting to closing
- Payoff and reconveyance: Escrow pays off existing deeds of trust and records lender reconveyances.
- Recorded releases: Judgment or tax liens are cleared by recording releases or satisfactions.
- Subordination or estoppel: Used when an existing instrument must sit behind a new loan or when contract terms need to be confirmed.
- Endorsements: Add targeted coverage if an exception cannot be removed.
- Escrow holdbacks: Funds may be held temporarily if a curable issue extends past closing.
Your title officer is your primary guide. Ask which exceptions are standard, which can be removed, and what endorsements they recommend.
Red flags and common misunderstandings
Red flags to escalate now
- Mechanics’ liens, judgment liens, or tax liens with no plan for payoff
- Multiple deeds of trust that are not clearly accounted for in payoffs
- Significant easements or rights-of-way crossing the lot
- Mineral or subsurface reservations with unclear impact
- Clouded title from unreleased prior transfers or quitclaims
Misunderstandings to avoid
- A prelim is not the policy. The final policy is issued after closing once requirements are met.
- If it is not on the prelim, it might still exist. Unrecorded agreements or encroachments may not appear.
- Title insurance does not cover physical defects or permit issues.
Where to verify and who to contact
- Title company and title officer: Copies of referenced documents and endorsement guidance
- Escrow officer and lender: Payoffs, reconveyances, and lender-required endorsements
- Orange County Recorder: Recorded deeds, easements, liens, and releases
- Orange County Assessor and Tax Collector: APN, taxes, and special assessments, including any Mello-Roos or district charges
- City of Costa Mesa Planning and Building: Permit history and zoning questions
- HOA or condo management: Estoppel letters, dues, transfer fees, and any special assessments
Your next steps in Costa Mesa
Save your prelim, read Schedules A, B-1, and B-2 closely, and request copies of each referenced document. If you plan improvements, study CC&Rs, easements, and setback notes. Confirm taxes and any special assessments with the county. When something is unclear, ask the title officer to explain it in plain language and outline the path to clearance. If you want a local partner to coordinate the moving pieces, reach out to Tyler Brown & Associates for guidance tailored to East Side Costa Mesa.
FAQs
What is a California preliminary title report?
- It is an early-escrow report that lists recorded matters affecting title, plus the requirements and exceptions the title company sets before issuing a final policy.
How is a prelim different from a title policy?
- The prelim is not insurance; it previews what the title company will cover and what it will not. The actual policy is issued after closing once requirements are met.
Who orders the prelim in Costa Mesa transactions?
- Your escrow, lender, buyer’s agent, or listing agent typically orders it soon after you open escrow.
Will the prelim show HOA dues or special assessments?
- It may reference CC&Rs and show tax assessments by citation, but you should confirm current dues and assessments with the HOA and county tax offices.
What if a mechanic’s lien appears on my prelim?
- Ask for payoff details and the plan to clear it. Many liens can be resolved by recorded releases, endorsements, or escrow holdbacks arranged before closing.
Do I need a survey if I see setback lines or easements?
- If you have boundary or encroachment concerns, consider a survey and ask the title officer whether a survey-related endorsement is advisable.
