Page 19 - Home Buyers and Sellers Guide - Hawaii

Is a preliminary report the same thing as title insurance?

Definitely not. A preliminary report is an offer to insure; it is not a report of a complete history of recorded
documents relating to the property. A preliminary report is a statement of terms and conditions of the offer to
issue a title insurance policy, not a representation as to the condition of title.

These distinctions are important for the following reasons: first, no contract or liability exists until the title
insurance policy is issued; second, the title insurance policy is issued to a particular insured person and others
cannot claim the benefit of the policy.

Can I be protected against title risks prior to the close of the real estate transaction?

Yes, you can. Title companies can protect your interest through the issuance of “binders” and “commitments.”

A binder is an agreement to issue insurance giving temporary coverage until such time as a formal policy is
issued. A commitment is a title insurer’s contractual obligation to insure title to real property once its stated
requirements have been met.

Discuss with your title insurer the best means to protect your interests.

How do I go about clearing unwanted liens and encumbrances?

You will wish to carefully review the preliminary report. Should the title to the property be clouded, you and your
agents will work with the seller and the seller’s agents to clear the unwanted liens and encumbrances prior to
taking title.

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