How to Read a Title Report Before You Close

You've got a title report sitting in your inbox and a closing date in three days. It's twelve pages of exceptions, legal descriptions, and language that reads like it was written to be skipped. You're not skipping it. Here's what actually matters and where to look first.

Start with Schedule B, not the cover page

The commitment or report will have a Schedule A (who's insured, the property, the sale price) and a Schedule B (the exceptions, the liens, the stuff that could bite you). Schedule A is bookkeeping. Schedule B is where deals die or get fixed before closing.

Read Schedule B Section 1 first. This lists what has to happen before the title company will insure the deal, things like paying off an existing mortgage, getting a satisfaction of judgment recorded, or clearing a divorce decree that never got the property properly transferred. If it's not resolved by closing, you either delay or you close into a defect.

Section 2 lists standing exceptions, things the policy won't cover no matter what. Easements, mineral rights, HOA covenants, unrecorded surveys. Most of these are boilerplate. Some aren't.

What to actually check line by line

I bought a duplex in 2019 where the title report listed a "utility easement, location undetermined" in Section 2. Sounds like nothing. It wasn't nothing. It was a 15-foot strip running through what I assumed was buildable side yard, and it killed a garage conversion I'd already priced out at $38,000. I found out after closing, not before, because I read the sentence and moved on instead of pulling the recorded easement document.

That's the mistake almost everyone makes. The report tells you an exception exists. It does not tell you what the exception actually restricts. You have to go get the underlying document, usually a two minute call or email to the title company, and read it yourself.

Here's the checklist I actually use, in order:

Liens and judgments. Any mortgage, mechanic's lien, tax lien, or judgment against the seller or the property. Confirm each one has a payoff amount and a clear path to release at closing. A $4,200 mechanic's lien from a roofing job three years ago doesn't go away because the seller says "that's handled." It goes away when there's a recorded release or a payoff figure baked into the closing statement.

Open mortgages. Check the amount against what the seller claims they owe. I've seen sellers who were off by $30,000 or more because they forgot about a HELOC draw. If the payoff plus your purchase costs exceed the sale price, the deal doesn't close without the seller bringing cash, and you need to know that before you're sitting at the table.

Judgments against people with the same or similar name as the seller. Title companies flag these constantly. Ten times out of ten it's not your seller. But confirm it, don't assume it. A five minute name and date of birth cross-check beats a closing delay.

Easements and rights of way. Get the actual recorded document, not just the reference. Know what it covers, who can use it, and whether it affects where you can build, park, or fence.

Legal description. Compare it to your purchase contract and to the survey if you have one. Mismatched legal descriptions, wrong lot numbers, wrong subdivision plat references, are more common than people think, especially on older properties or ones that got subdivided at some point.

Vesting. Confirm the seller named in the report is actually who holds title, and that all owners are on the contract. If title is held by a trust or an LLC, confirm the person signing has authority to sell.

Why title companies word it the way they do

The vague language isn't sloppiness. Title insurance is a liability business, and the underwriter's job is to define exactly what they will and won't stand behind if something goes wrong after closing. "Location undetermined" on my duplex easement wasn't the title company hiding something from me, it was the title company telling me, correctly, that they hadn't determined the location either, and that I should before I relied on the space being usable.

That's the mental shift that makes title reports readable. Every exception is the title company saying "we're not covering this, so you decide if you're okay with it." Your job is to decide, not to assume someone already decided for you.

What people get wrong

The biggest mistake is treating the title report as a formality that closes on schedule no matter what. It's not a formality. It's the one document in the entire transaction that tells you what you're actually going to own.

The second mistake is waiting until the day before closing to read it. Most contracts give you a title review period, often 5 to 10 business days after the report is issued. Use it. If you find something on day 8 that needs to be resolved, you've got no room left to negotiate a credit, extension, or exit.

The third mistake is assuming your lender's review covers you. Your lender is checking that their lien will be in first position. They are not checking whether that easement kills your garage conversion or whether the HOA has a right of first refusal that slows down your exit. That's your review, not theirs.

A worked example

Say you're buying a single family rental for $210,000. The title report shows an existing first mortgage of $142,000, a judgment lien from an unpaid contractor for $6,800, and an HOA assessment lien of $1,150.

Total encumbrances: $149,950. Your purchase price minus those payoffs and normal closing costs, call it $6,000, leaves the seller $54,050 before their own proceeds. If the seller's contract with you assumed they'd net $70,000, someone's math is wrong and it needs to get fixed before you show up to sign, not during the closing itself when everyone's already in the room.

This is arithmetic anyone can do with the numbers on the report. That's the point. You don't need a law degree to read Schedule B, you need to actually read it and do the addition.

One honest limitation

A clean title report is not a guarantee of a good deal. It tells you what's recorded against the property. It doesn't tell you about unrecorded agreements, unpermitted work, or a boundary dispute the neighbor hasn't filed yet. Title insurance protects you against covered defects that surface later, it doesn't make the property worth what you paid for it. Read the report carefully and still get your own inspection, survey, and, when the numbers are big enough, an attorney's eyes on anything unusual in Schedule B.

If you want a second pair of eyes before you sign anything, or a rundown of what to flag on a report you already have in hand, that's exactly what Deal Machine is built for. Take a look at readmoneydecoded.com/deal-machine.

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