Financing

What transactional lenders scrutinize in a preliminary title report

Transactional lenders focus heavily on the preliminary title report to ensure a clear chain of title for a double close. They are looking for any encumbrances that could prevent a clean transfer from seller to you, then to your buyer, all within the same day.

October 26, 2026 · 3 min read

Chain of title clarity

Transactional lenders require a clear and unbroken chain of title. They need to see that the current owner legally acquired the property and that there are no gaps or ambiguities in ownership history.

Any missing deeds, unrecorded transfers, or discrepancies in names from one transfer to the next will raise immediate red flags. This ensures they are funding a legitimate transfer from seller to you.

If the chain of title is murky, the lender will likely decline to fund until those issues are resolved, which can delay or kill your double close. This is not financial advice; always consult a legal professional for specific title issues.

Outstanding liens and judgments

The preliminary title report will reveal any outstanding mortgages, tax liens, mechanic's liens, or legal judgments against the property or the seller. Transactional lenders will not fund a deal if there are unreleased encumbrances that are not being paid off at closing.

They need to confirm that their funds will secure a clear title for your purchase (A to B transaction) and that you, in turn, can deliver a clear title to your end buyer (B to C transaction).

If a lien is discovered, you will need to determine if it can be satisfied from the sale proceeds or if other arrangements are necessary. Sometimes, an old, unreleased lien may require a quiet title action, which transactional lenders typically will not wait for.

Property access and easements

While less critical than liens, lenders will note any easements or access issues. They need to confirm that the property has legal access and that no easements significantly devalue or complicate its use.

For example, a landlocked property or one with extensive utility easements could pose future resale challenges. Transactional lenders are less concerned with these issues than traditional lenders, but they still want to ensure a marketable asset.

They need to confirm that the title commitment for the B to C transaction will be clear of any unusual or problematic easements that might deter your end buyer.

Taxes and assessments

The report will detail current and delinquent property taxes, as well as any special assessments. Transactional lenders require all these to be current or paid off at closing.

Unpaid taxes represent a superior lien against the property, which must be cleared for a clean title. They will ensure funds are allocated to settle these at the first close.

They are confirming that the property will be transferred to you without tax encumbrances, allowing you to pass a clean title to your end buyer.

Parties involved and their authority

Lenders verify that all parties on the deed are involved in the sale and have the legal capacity and authority to sell. This includes confirming marital status, probate status for inherited properties, or corporate authority for LLC-owned properties.

If a property is held in a trust, they will require trust documents to verify the trustee's authority. Any discrepancies here can halt the transaction entirely.

They need confidence that the seller is the sole legal owner or that all necessary owners have consented to the sale. This protects both the lender and you from future ownership disputes.

Disclosures and notes

The preliminary title report often includes disclosures or notes from the title company regarding potential issues or requirements. Read these carefully.

These might include demands for specific affidavits, proof of identity, or a requirement for additional documentation before closing. Ignoring these can cause delays.

Transactional lenders rely on the title company's expertise to flag anything unusual. Addressing these points proactively ensures a smoother closing process for both transactions. You might find value in understanding /for/wholesalers if this is your primary exit strategy.

Questions people ask

Do transactional lenders care about my credit?

Typically, transactional lenders focus more on the deal's viability and the clarity of title rather than your personal credit. They are underwriting the transaction itself, not you as a long-term borrower.

What if the title report shows an old lien?

An old, unreleased lien is a problem. You will need to work with the title company to get it released, which might involve contacting the original lienholder or, in rare cases, pursuing legal action. Transactional lenders generally won't fund until it is resolved.

Can I still use transactional funding for an inherited property?

Yes, if the probate process is complete and the heirs have clear legal authority to sell, and the title is clear. If probate is ongoing or there are heirship disputes, a transactional lender will likely not fund the deal until those issues are resolved.