Title reports look intimidating — 10–30 pages of legalese, schedules, exceptions, and references. For wholesalers, they boil down to five things. Knowing what those are saves deals and protects you from closing on a property with hidden problems.
This guide shows what to look for in any title report, what the common red flags mean, and when to walk away.
What a title report is
A title report (or "preliminary title report") is a title company's research summary showing: who legally owns the property, what liens and encumbrances exist against it, and any title exceptions that would limit ownership.
It's a snapshot before closing. The title company uses it to determine what needs to be cleared for a clean transfer, and what coverage to provide in the title insurance policy.
The 5 things every wholesaler should check
1. Vesting (who actually owns it)
Look for a section titled "Vesting" or "Estate or Interest". It will state something like:
"Vesting: JOHN SMITH AND JANE SMITH, HUSBAND AND WIFE, AS JOINT TENANTS WITH RIGHT OF SURVIVORSHIP"
Make sure the name on your contract matches the name on vesting. If the seller's name is different (because they changed it, married, got divorced), you need corrected paperwork or additional signers.
2. Legal description
The full legal description (Lot X, Block Y, etc.) should match your contract. A simple address mismatch can invalidate the contract.
3. Tax status
Look for a "Taxes" or "Real Estate Taxes" section. It tells you:
- Current tax amount
- Whether taxes are paid or delinquent
- Any back-tax liens
- Special assessments
Unpaid taxes stay with the property. Factor them into your MAO.
4. Liens and encumbrances
Look for a section titled "Schedule B" or "Exceptions". This lists every lien or right against the property:
- Mortgages / Deeds of Trust — primary and secondary loans
- Judgments — court-ordered debts against the owner
- Mechanics' liens — from unpaid contractors
- HOA liens — delinquent HOA dues
- IRS / state tax liens — worst kind; very hard to remove
- Utility liens — for unpaid water/sewer
Every lien must be paid at closing (from the seller's proceeds) unless your contract specifies otherwise. The sum of liens can exceed the property value — killing the deal.
5. Easements and CCRs
"Easements" give a third party the right to use part of the property (utility lines, driveway access, etc.). "CCRs" (covenants, conditions & restrictions) are usage rules from HOAs or subdivisions.
Red flags: easements that bisect the buildable part of the lot, CCRs restricting short-term rentals or additions. These affect the property's value and your buyer's interest.
The red flags that kill deals
1. Multiple mortgages totaling near or above value
If loan balances = 90%+ of value, there's no room for a wholesale fee. Deal may still work as a subject-to or short sale.
2. IRS tax liens
Federal tax liens are hard to clear. They typically require the IRS to release the lien or the seller to pay in full. Days or weeks of delays are normal.
3. Lis pendens
"Lis pendens" means pending litigation. Someone has filed a lawsuit claiming an interest in the property (common in divorces, estate disputes). Until resolved, title can't transfer cleanly.
4. Unrecorded rights of tenants
If there are tenants on the property, their lease (even unrecorded) may survive the sale. Check if the title report notes "rights of parties in possession" as an exception.
5. Fraud indicators
Multiple deed transfers in short periods, liens far exceeding property value, same person listed as both buyer and seller in past transactions — these can indicate title fraud. Title company will flag; trust them.
How to handle issues
Once you know what's on title:
- Negotiate repairs with the seller from the purchase price (they pay off the liens at closing)
- Back out under your inspection contingency if liens exceed viable deal math
- Get title insurance to protect your end-buyer from anything title missed
When to use a title search vs preliminary title report
- Title search ($50–$200): quick look before contract to verify ownership and obvious liens
- Preliminary title report (part of escrow): full formal report during escrow
- Final title insurance policy: issued at closing with full coverage
Smart wholesalers pull a cheap title search before signing a contract to avoid discovering problems during escrow.
Bottom line
Don't be intimidated by title reports. Check vesting, taxes, liens, easements — 90% of title reports look fine. The 10% that don't will show it fast. When they do, trust the title company and factor the issue into your negotiation.