If you’re looking to expand your investment portfolio or bring in some passive income, commercial property investment may be right for you. However, you also want to ensure that your financial interests are protected during such a large purchase, and most investors do this through a title insurance policy. Title insurance provides you with peace of mind and financial security in the event of any unexpected issues arise with your property or its title, but you’ll also want to tailor your coverage to your unique situation.
For that we turn to ALTA endorsements. ALTA stands for the American Land Title Association, and they offer a variety of endorsements that can enhance your title insurance policy and protect you against the specific risks you’re most likely to run into given your type of commercial investment. Below, we take a closer look at seven of the most common ALTA endorsements that you may want to consider depending on how you’re looking to expand your commercial portfolio.
The Most Common ALTA Endorsements
These ALTA endorsements address unique circumstances that you may run into depending on what type of property you’re purchasing. Here’s a look at seven of the most common standardized ALTA endorsements that are added to a traditional commercial title insurance policy:
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ALTA 1 - Extended Coverage - This is the most common ALTA endorsement, and it provides additional coverage beyond standard risks. This is used to protect against zoning violations and certain encroachments.
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ALTA 4 - Condominium Endorsement - This endorsement addresses some of the unique risks associated with condominium properties, like access to common areas and condominium association rights.
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ALTA 6 - Variable Rate Endorsement - Interest rates have gone up quite a bit in the last five years, and this may push more people to consider a variable term interest rate on their property instead of a fixed rate. ALTA 6 covers changes that may affect your loan or investment if you’ve chosen a variable interest rate for your loan.
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ALTA 7 - Manufactured Housing - This endorsement insures manufactured housing units located on your land, including pre-fab homes, mobile homes, modular homes and other manufactured housing permanently attached to the land as a fixture.
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ALTA 8 - Environmental Protection - ALTA 8 provides additional coverage against environmental issues or similar claims that could negatively impact a property’s value.
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ALTA 13 - Leaseholder Endorsement - If you’re purchasing a property where tenants will be leasing from you, your title advisor may recommend ALTA 13, which ensures that your tenants are protected in the event of an unexpected title defect.
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ALTA 17 - Access Endorsement - ALTA 17 confirms and ensures that the property has legal access to public roads, making sure that you and any other investors or employees can use the property as needed. An access endorsement also improves the marketability of a property in the event that you want to sell your investment down the road.
There are many more ALTA endorsements that may be needed for your specific commercial venture, and we will make sure you have the right coverage for your situation. For more information about ALTA endorsements, or for answers to any other questions you have about commercial property acquisition, reach out to the team at Commercial Partners today at (612) 337-2470.