Paying for a commercial title search is hardly the most exciting expense during the process of researching and purchasing commercial property, but for many it can end up being the most important decision they’ll ever make. That’s because when it comes to a commercial property title, what you don’t know can hurt you. Two ways to protect against title issues are with the help of a title search and title insurance. We discuss the cost-benefit of each of these items in today’s blog.
Protecting Your Commercial Title
A commercial title effectively serves as a proof of ownership of a specific property, and you’ll obtain the title easily enough during the course of your purchase. However, it’s not just about obtaining a title to a property, you need to secure a clear title, meaning there are no issues linked to your ownership. As we’ve talked about in the past, some of those potential title issues include:
The first step to obtaining a clean title during the course of a commercial purchase is to conduct a thorough title search. Not only will you learn of any so-called “clouds” on the title, but you’ll also learn about the specific property lines, relevant zoning regulations and environmental aspects about the property you are considering buying. Discovering issues before closing will give the seller time to correct these issues or it will allow you to adjust your offer based on this new information.
Not being aware of potential issues will not free you from their responsibility once you take over the property. This is why proper research during the due diligence stage of the commercial purchase is a crucial time for conducting title searches and other necessary land surveys.
The second way that you can protect your property and your title comes in the form of a title insurance policy. Despite the title service company’s best efforts, it’s possible that some issue was missed through no fault of their own. Title insurance ensures you aren’t on the hook for new issues that are discovered that date back to before you purchased the property.
For example, if a presumed dead heir shows up claiming that the original sale was invalid because they have ownership in the property, or the original owner did not have the full legal rights to sell the property, that other party may have a valid claim to your property. This issue and many others can be effectively handled with a title insurance policy. An owner’s title insurance policy offers financial protection in the event of valid or invalid claims against your property that you were not responsible for.
When used together, a title search and title insurance can provide a buyer with peace of mind knowing that their commercial purchase is protected from any and all issues tied to their newest commercial property. Both services have nominal fees and can provide a lifetime of protection for issues that pre-date your acquisition, so don’t pass on these essential options during your next commercial purchase. At Commercial Partners, we can provide both a title search and title insurance for your next purchase to help protect your latest investment. For more information, or for help with a different aspect of commercial real estate, give our team a call today at (612) 337-2470.