And they should all be specified in the contract, right?
Real Estate Attorney
Normally, in a residential purchase contract, the buyer has the right to review and approve, or review and disapprove, a preliminary title report. The "prelim" should identify all liens and encumbrances recorded against the property. Theoretically, in a normal transaction, the liens should be paid off in escrow. The encumbrances, such as easements, remain on the property, and you need to determine whether you are OK with easements. Some easements you need, (such as utility, ingress/egress), but some easements may give rights to other users. So you need to ask the title officer to identify, on a title map, where the easements may be, (their location may be important if you have plans to remodel or expand...)
Most real estate agents don't understand how to explain a prelim... your best bet is to schedule time with a real estate attorney, or better yet (because it is free), with the title officer.
Attorney Hoffman is correct. If you are using the California Association of Realtors form for the purchase and sale agreement, there will be a time period for you to approve certain reports. You will obtain a Preliminary Report from the title company. If there are any defects in title, AND you are withing the time period set forth in the purchase agreement, you should be able to cancel the transaction.
Frank W. Chen is licensed to practice law in the State of California. The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, consult your own attorney.
Construction / Development Lawyer
Title defects would generally be contained within a title report, and some could result in voiding sales of real property. Such defects might not be known to the seller, so they would not typically be specified in the purchase and sale agreement.