Loan Officer Practice Exam

What is a preliminary title report?

1. A comprehensive search of property ownership

2. A legally binding document that transfers title

3. A document informing parties of current property ownership and lien information

4. A type of mortgage contract

The correct answer is: A legally binding document that transfers title

A preliminary title report is a document that informs parties of current property ownership and lien information. It provides a summary of the property’s legal status, including the names of the current owners, any liens or encumbrances on the property, and other critical details related to the title. This report is essential for anyone involved in a real estate transaction because it helps identify any potential issues with the property's title before the sale closes. It allows buyers, sellers, and lenders to assess risk and make informed decisions regarding the property in question. In contrast, the other choices describe different real estate concepts. A comprehensive search of property ownership refers more to the entire historical context of ownership rather than just the current status provided in the preliminary title report. A legally binding document that transfers title refers to the actual deed, which is executed after the closing of a property transaction. Lastly, a type of mortgage contract would involve the terms of loan repayment and mortgage agreements, which is unrelated to the title status being reported. Therefore, the correct focus of a preliminary title report is on providing current ownership and lien information, which is crucial for the transaction process.