California Real Estate Practice Exam

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What is the primary purpose of a preliminary title report?

To protect the seller
To offer insurance to the buyer
To show the buyer the current status of the title before purchase
To negotiate the final closing date

The correct answer is: To protect the seller

The primary purpose of a preliminary title report is to show the buyer the current status of the title before purchase. This report indicates whether there are any liens, encumbrances, or other issues that could affect the buyer's ownership of the property. It provides crucial information about the title's condition and clarity, allowing the buyer to make informed decisions before completing the transaction. While the report can indirectly protect the seller by ensuring that potential title issues are identified early, its main function is to inform and protect the buyer regarding the title status, contributing to a smoother transaction process. The other options, such as protecting the seller or negotiating the closing date, are not direct purposes of the preliminary title report.