A Title Report records every encumbrance attached to a property — easements, liens, mineral rights, and use and development restrictions. Failing to review this document item by item before purchase can mean buying land you cannot develop or use as planned, dramatically reducing its value, in extreme cases by hundreds of thousands of dollars.
A Real Warning Case
A St. Petersburg, Florida resident named Hammond discovered, 14 years after buying his home, that a 50-foot-wide easement for a city water pipeline ran through his yard. Because the water company has the right to enter and even demolish surface structures to maintain the pipe, the property that Zillow estimated at ~$920,000 became almost worthless. The root cause: the government laid the pipeline in 1930 but the relevant documents were not publicly recorded — the title company had no way to find them through public channels. The homeowner is now suing the city for government negligence and may receive partial compensation. But this case proves: once a title defect surfaces, losses routinely run into the hundreds of thousands.
What Are Easements and Title Reports?
An easement gives a person or company the right to use part of someone else's land or conduct specific activities on it without owning the land. The most common are utilities easements — water, power, and access rights — and occasionally private agreements between neighbors transferring land use rights.
To uncover these issues before purchase, you need a title report and title insurance. Title insurance protects buyers and lenders from financial loss due to title disputes. But the title company investigates historical title issues in advance and lists what it will not insure — typically in Schedule B Part II of the title report.
Six Common Hidden Risks in Title Reports
First: easements — others have the right to use your land or home. Second: covenants, conditions, and restrictions (CC&Rs) — imposed uniformly by developers on all owners in a development, such as no pets or no street parking. Important note: many people assume only HOA communities have restrictions, but in fact any home, with or without an HOA, can have CC&Rs.
Third: liens or encumbrances — typically the seller's mortgage, usually cleared at closing. Fourth: mineral rights — many Bellevue homes have historical mining-company mineral rights on record. Fifth: non-subdividing restrictions — very common in post-1950 urban land, meaning even if HB1337 takes effect allowing DADU additions for separate sale, feasibility is very low. Sixth: rarer but highly damaging restrictions — for example, explicitly prohibiting rentals (which can cut home value by at least half), or the home being designated as a surface water runoff easement for a neighbor (also severely depressing value).
Can These Risks Be Removed?
Apart from seller debt obligations, restrictions in title reports are almost always irremovable — they 'run with the land.' That is exactly why title companies must unearth them, list them, and declare they won't insure against them. The only exception: when law mandates removal. For example, Seattle lakefront older homes often carried discriminatory 'whites only' occupancy clauses; the Fair Housing Act of 1968 voided all such clauses.
Note: even if an easement is listed in Schedule B Part II, the property can still close — but the title company will have no obligation to compensate the buyer. Documented risks are 'face-up cards' that buyers accept at their own risk.
Summary
A small survey of 130 Seattle-area homebuyers found zero people had carefully read their title report — and 127 of them had never even heard of the document (97%). The probability of a title defect is low, but when it occurs the loss is hundreds of thousands of dollars. This asymmetric risk should never be ignored.
For Seattle's Chinese-American buyers, reviewing the title report is a non-negotiable step. A single-family home title research typically takes 3–5 hours, occasionally up to 10 hours. With a professional agent or title advisor, review every item in Schedule B Part II to confirm whether easements, split restrictions, and use clauses conflict with your intended use and development plans before deciding whether to make an offer.
