Why is the listing agreement rejected with the note “needing prelim to approve” when we have not opened escrow yet? (CA instance)

The listing agreement is not complete without a preliminary title report because Compliance has to verify that the record title owner of property is identical to the name seller on the listing agreement.

While it is true that often the prelim is not ordered until the property goes into escrow, it is still the case that the listing agreement is not technically compliant until that verification is made.