When you work with a title service company like Commercial Partners, you greatly reduce the likelihood that a title defect complicates your purchase or causes problems after you’ve signed on the dotted line. But what specific issues can title insurance protect you from when purchasing a commercial property? Let’s look at eight common title defects that could prove costly if you don’t have title insurance.
Beware These Title Defects
Overall, undiscovered title defects are quite rare, but when they do occur, it’s usually one of these eight issues:
- Undiscovered Liens - If a former property owner failed to pay off all their debts, a lien may be taken up against the property, and that can become your problem as the new owner.
- Clerical Errors - A minor bookkeeping mistake or oversight can cause major headaches if they are eventually discovered and you don’t have an owner’s title insurance policy.
- Missing Heirs - Perhaps a long-lost heir shows up claiming true ownership of a property. If they end up having a valid claim to the property because of an invalid original sale, you may be out of luck.
- Forgery - Scams are an unfortunate reality in the world of commercial real estate. If title details or the title itself is a forgery, you may be on the hook for the problems it causes without title insurance.
- Easements - Most easements are clearly spelled out on a title and discovered during a title search, but an easement agreement can cause problems for your land or how you use it if they are uncovered after your purchase.
- Boundary Disputes - If it turns out that the boundaries of the property are improperly marked and this isn’t discovered until after purchase, you may not have access to certain areas like you expected, or you may end up building on a neighbor’s property, which can be a costly mistake.
- Newly Discovered Will - The state may struggle to find a will for an individual with no clear heirs, but if a will is discovered down the road, it can cause major problems for your commercial property.
- Unpaid Taxes - If the previous owner failed to pay property taxes, and this fact is not discovered until long after you’ve completed the purchase, that outstanding debt associated with the property will be your problem to solve, unless you have title insurance.
Nobody expects to have to deal with any of these issues after purchasing a commercial property, but it’s an unfortunate reality for a small percentage of buyers. The headaches associated with these unforeseen issues can be alleviated by securing a commercial title insurance policy that protects you against any and all of the above issues. Best of all, this policy only requires a one-time origination fee, meaning you’ll have coverage for as long as you own the property. It’s a small price to pay for decades of peace of mind.
To learn more about commercial title insurance or protecting your financial interests during a commercial purchase, reach out to the team at Commercial Partners today at (612) 337-2470.