Preliminary Title Report – What You Need to Know

The preliminary title report is an important document that provides a legal property description, information about current owners, and insight into the history of the property. It provides a record of any documents recorded against the property address in the public record including items like use restrictions, easements, or other matters of public record that may affect your ability to use and enjoy your property. A prelim title report is created in preparation for title insurance being issued. Title insurance, in a nutshell, is insurance that protects your ability to use and enjoy your property.

// This post is a part of our series: Your Guide to a San Francisco Disclosure Package //

The Preliminary Title Report is a *property specific* disclosure. It is a very important disclosure to review.

Title insurance is defined at Wikipedia as:

Title insurance is a form of insurance predominantly found in the United States which insures against financial loss from defects in title to real property. It is meant to protect an owner’s or a lender’s financial interest in real property against loss due to title defects, liens or other matters. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy. The first title insurance company, the Law Property Assurance and Trust Society, was formed in Pennsylvania in 1853.

In California, if you are purchasing a home with a mortgage you will be expected to buy two policies – an owner policy that insures you (at your purchase price amount) and a lender policy that insures your lender (for the amount of the loan).

Preliminary Title Report – Sample Page 1

Preliminary title reports are provided by the title company that is acting as the escrow agent for the transaction. The sample we are using in this example is for a single family listing we had at 119 Bridgeview in San Francisco. Page 1 identifies as the report as a preliminary title report, and includes information about the insurance company issuing title insurance as well as the date at which the title report was created.

Preliminary Title Report – Sample Page 2

Every title report will identify the type of land purchase being made. It will almost always be a fee simple purchase. A title report will also identify the current owners and provide the legal description of the property. After all of that, it begins with the list of exceptions, which are items that title insurance will not cover. There are a list of very typical exceptions that we expect to see on a title report, and what we are looking for is anything that isn’t a “typical exception.”

On our sample page 2, the list of exceptions begins with property taxes – which are exceptions 1, 2, and 3 on the sample report we are reviewing. Property taxes are always an exception – you can never expect your title company to pay them for you or protect you from not paying them. In our case, item #1 is for the next tax year, item #2 is for the current tax year, and item #3 is for any supplemental tax bills issued.

Preliminary Title Report – Sample Page 1

Item 4 on the next page is the Mello Roos exception – in San Francisco we have a Mello Roos assessment to our taxes that was assessed after Loma Prieta. Below that, item #5 is another “typical exception” for San Francisco which is a sustainable financing program that was designed to allow people to make environmental upgrades to their home and finance them. However, the way the program was implemented creates an issue with getting loans that conform to national underwriting standards, and I’m not aware of the program actually being active or used because of the issues it creates.

Item 6 is for the covenants, conditions, and restrictions (CC&Rs) that have been recorded against the property and contains rules that affect what you can do with your home. A condo will always have CC&Rs, and many single family homes in SF are in neighborhoods that have neighborhood use restrictions. If we wanted to read a copy of the CC&Rs that affect this property (which we would, if we were the buyer), we could click on the blue link in the title report for the recorded copy.

Preliminary Title Report – Sample Page 4

Items 7 and 8 on this sample preliminary title report are the current deeds of trust (mortgages) on the property. If you are making a purchase you want to be sure that the payoff amounts from the sale will be enough to fully payback the existing loans. If it won’t be enough, either the seller is doing a short sale or bringing money to the closing to make up the difference. If you are purchasing with financing, your mortgage(s) will replace the existing mortgage when your loans fund and the purchase closes.

That’s a very quick overview of a prelim title report. We’ve reviewed what title insurance is and what a typical preliminary title report and exceptions look like in San Francisco. We’ve seen a lot of interesting things on title reports over the years, and it is a very important document to review with your agent.

Underground Storage Tanks: What you Need to Know

The Underground Storage Tank Disclosure is a general disclosure document that contains background information explaining what an Underground Storage Tank (UST) is, and why you want to be aware of if the property you are considering purchasing might have a UST.

// This post is a part of our series: Your Guide to a San Francisco Disclosure Package. //

The Underground Storage Tank Disclosure is a *general* disclosure. The disclosure does not contain property specific information, but it does contain important information that you should read at your convenience. This disclosure is often provided in conjunction with an Underground Storage Tank Inspection, which we will discuss separately.

An Underground Storage Tank Disclosure Form used in San Francisco
An Underground Storage Tank Disclosure Form used in San Francisco

Underground Storage Tanks were typically used in San Francisco to store heating oil. While they are more common in older neighborhoods on the northern side of town, they have been found scattered across the city.

Our understanding of state law is that it requires the seller to remove and remediate an underground storage tank. However, there is no way to know if you have a UST unless you have an Underground Storage Tank inspection, which is typically a visual inspection performed at the exterior of the home (in other words, you don’t need to go inside to inspect for a tank) performed by a company that specializes in underground storage tank inspections.

As a buyer, you want to make sure that there is no underground storage tank, or that if there is a tank it is discovered before you are the property owner. These inspections make the most sense on single family homes. For recently built condominiums that had to excavate below ground as part of their construction process they would have mot likely discovered and removed any tanks during construction. That said, we’ve heard of one large condo building (it was previously a hospital, converted to condos) where a diligent buyer found USTs – and then the HOA had to have them removed!



Lies, Damn Lies, Statistics

Unless you know about the data behind the data, most SF real estate charts probably doesn’t mean what you think they do. For example: Is a condo or a single family home in San Francisco more expensive?

We love data! We wrote a neighborhood by neighborhood guide to 2013 sales prices, crunched the numbers to compare MLS and off-MLS sales, and just today posted our 2014 Luxury Condo building survey. At this week’s sales meeting, the below graph was shared by the management team and I think it is a great example of how a chart usually raises more questions than it provides answers:

Condos vs SFR: Accurate or Not....?
Condos vs SFR: Accurate or Not….?

I had a few quick thoughts when I saw the above chart:

  • What about district 10?
  • How big?
  • BMRs?

District 10 is the most southern part of San Francisco, and essentially is the area south of 280 and north of the county line. It is home to some of San Francisco’s poorest and least-safe neighborhoods. The housing stock in District 10 is also almost exclusively single-family homes – I can think of one big condo project in the entire district….

The chart above also doesn’t take into account that single family homes are often larger than condo homes. Which leads to my charts!

Finally, I wasn’t sure if the above chart filtered out BMR and senior-only condos that have price or other restrictions that would weigh down the average condo price…

In my years of being a San Francisco Realtor, I’ve seen plenty of people actually prefer a condo to a single family home for a variety of reasons, and while I work with plenty of buyers that want a single family, I work with just as many people that are indifferent to condo or single family and a sizable number that don’t want a single family home.

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Based on my calculations, the median price for a condo is slightly higher than Zephyr computed – so those BMR and senior condos had brought the average down by a bit (about $20,000). And look – single family homes are bigger than condos! And look – if you take out district 10, it reduces the number of single family homes by 45, while the number of condos is only reduced by 4. In other words, District 10 is all about single family homes, and often single family homes at the lower end of the price range.
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In absolute price dollars, a single family is more expensive than a condo. But if we look at price per square foot, condos actually are more expensive. Across the city, the median price per square foot for a condo is about $917/square foot while a single family home comes in at $785/square foot.
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When we take out District 10, single family homes get a lot more expensive and condos are unchanged:image (4) On a price per square foot basis, taking out District 10 puts single family homes and condos almost on price parity. But condos still come out slightly more expensive on a price per square foot basis. image (6)


Robin Williams & The Mrs. Doubtfire House

The surprising and saddening news of Robin Williams’ suicide earlier this week has reverberated through the bay area. Robin Williams lived in the north bay, and was often spotted in San Francisco. SFGate had an article yesterday about the Mrs. Doubtfire home and how it has become a sort of shrine over the past several days.

As you can see in the video above, a normally non-remarkable intersection in Pacific Heights has become a rather sad and sedate but bustling corner of activity. The owner of the home, Douglas Ousterhout, is a Robin Williams fan and has a great attitude toward his home becoming a memorial site to Robin Williams. But what if the owner didn’t have such a good attitude about it all?

Mrs. Doubtfire was a 1993 movie, and Douglas Ousterhout has owned the property since 1997. There are two previous MLS listings from 1993 and 1994, both of which were withdrawn/expired without a sale. One listing notes that the property was the home of “Sophie Julien for 50 years” and the other notes that it was a “‘location’ Shoot For Fox Film, ‘mrs. Doubtfire’ Starring Robin Williams!” 

What if the owner hadn’t been informed of the home’s use in a famous movie? Does the current owner have a duty to disclose this to future residents, particularly since  fans may now show up on a regular basis to remember or pay tribute to an incredible comedian?

Robin Williams’ suicide has brought depression and mental health into the spotlight, and there have been many conversations this week about how we can support those struggling with depression or a mental illness. Most of them, fortunately, are much more thoughtful than the stupid and thoughtless lines spewed by Rush Limbaugh. While they are a minor footnote to the bigger questions being raised, his death also points out some interesting questions for property owners as well.

What You Should Know About the SF 3R Report

The 3R report is issued by the San Francisco Department of Building Inspection (DBI) and provides a building permit history for a San Francisco property. It is a required disclosure for almost every purchase/sale transaction in San Francisco, with the exception of brand new construction, in which case the CFC (certificate of final completion/certificate of occupancy) usually fills in.

// This post is a part of our series: Your Guide to a San Francisco Disclosure Package. //

The SF 3R report is a *property specific* disclosure. Read it as soon as it is available, even if the city doesn’t stand behind the information it provides.

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A 3R Report issued by the SF DBI

The 3R report is a report of residential record, and it contains information about original and current use, as well as a list of building permits and their status (I = issued, N = no job card found, X = permit expired (work not started or not completed, C = completed). Here’s a handy explanation of terms used in the 3R Report by DBI. It is important to note that the 3R only contains a record of building permits. It does not include plumbing or electrical permit information.

SF DBI has an online portal where you can view a lot of property information online. The DBI website allows you to view building, electrical, and plumbing permits that have been issued since the mid-1980′s (roughly), but does not include any permits older than that. Because the city is incredibly slow at processing 3R requests (inefficient or understaffed, depending on who you ask), it can often be helpful to look up a property online. But be aware that the online record history is not complete.

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The boilerplate warning about inaccuracies in the 3R

The 3R report comes with a warning document that doesn’t inspire much confidence in DBI. Even though the report costs $165 (as of August 2014) and is mandated by city law, the building department has no obligation to get anything on the 3R report correct. In addition, DBI does not warrant the data that they do provide, and as the warning document says:

“Buyers of residential real property in San Francisco should never rely on information contained in 3-R Reports.”


In a perfect world, the 3R would provide a buyer with an accurate and complete permit history (so that buyers can understand what work was done with or without permit), as well as accurate information about the current use (it matters for unit buildings that want to condo convert, to name just one example) of the property. But our world is far from perfect – we have a variety of strategies for helping deal with 3R issues and the questions the document generates, we hope this overview gives you a better understanding of this important disclosure document.


Good BBQ in NOPA

I love BBQ – and finding good BBQ in San Francisco is a surprising challenge. The latest contender is 4505 BBQ & Burgers (or Burgers and BBQ, depending on your priorities) which is along the Divisadero Corridor @ Grove, an area that is becoming the Divisadero Dining Destination (NOPA & Bi-Rite are both nearby,  not to mention Popeye’s Fried Foods!). Living in either Alamo Square or NOPA would put you within a very short walk of the 4505 BBQ joint.

I managed to snag lunch there last week – even at 11:30am there was a line (nothing like Ike’s). I had a lovely little spot to myself at one of the wooden picnic tables outside (they don’t have any inside seating except for a few bar stools – this definitely isn’t the place to come and eat when it’s raining, but since we are in a drought….) where I enjoyed an excellent pulled pork BBQ sandwich and fries.

The fries are fried in tallow, which definitely doesn’t taste like fries fried in canola oil. :-) They were excellent, freshly crisped up and not soggy at all.

The BBQ pork sandwich was also a keeper – it appears to have arrived with a mustard-based sauce, but I slathered it in their sweet BBQ sauce and the crisis was averted (I have a strong and completely irrational dislike for most condiments, including mustard, ketchup and mayo). The pork was flavorful and tender and moist – well cooked and seasoned!

Of all the BBQ I’ve had over the years in SF, I’d definitely have to put 4505 in the top 3, and I’d probably even have to give it the gold medal. So head on out to NOPA. Even if you don’t want to buy a house, you should treat yourself to an excellent burger or bite of BBQ.