In larger cities, it’s pretty common for commercial spaces to be completely reimaged by a new owner. A defunct auto body shop may be turned into a classic-style diner, or an old warehouse converted into a hip new brewery. There are immense opportunities to reimagine commercial spaces, but there are also unique challenges that you’ll face when bringing those visions to life. Some of those challenges can be identified or addressed with the help of a title search. In today’s blog, we explain why adaptive re-use spaces should always be vetted with a title search prior to closing.
Title Searches For Reimagined Commercial Spaces
It’s always wise to conduct a comprehensive title search if you’ll be investing in commercial space, but that’s especially true if you plan to overhaul the current space with a renewed vision. Here’s what a title search can help protect against:
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Title Defects - First and foremost, a title search will work to uncover any defect or clouds on a title that could compromise a smooth sale. This title search will establish a clear chain of custody and determine if anyone else has ground to make a claim on the property. For example, there may be unpaid property taxes or a mechanic’s lien associated with the property, and you may take on these obligations if you close while these liens are in place. Discovering the liens prior to closing can ensure you don’t get stuck holding the short end of the stick.
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Environmental Issues - Depending on how the space was previously used, it’s possible that the ground or the water has been contaminated, and if that impacts your vision, this may not be the right space for your business. Your title company can conduct any relevant environmental surveys to learn more about the health of the property before you take over.
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Land Use/Zoning - It’s incredibly important that you look into land use and zoning laws when your adaptive re-use property. If the area is zoned as residential housing or for a specific type of business, and your new vision would not fall in line with how the property is zoned, you’re going to have to rethink your plan. It’s possible that you could get the property rezoned, but that can be a headache depending on your local laws and ordinances, so it’s wise to ensure you understand land use and zoning laws for your prospective property ahead of time.
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Historical Place/Restrictive Covenants - It’s possible that the space you are looking at includes an area that has been designated as a historical site that cannot be changed, or it includes an area subject to a restrictive covenant (like a cemetery or religious building). Although it’s pretty rare for these issues to come up, they do tend to be more common in adaptive re-use spaces.
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Easements And Access Rights - Your title company will also uncover any easements or access rights associated with the property. It’s important to remember that easements and many access agreements persist despite changes in ownership, so don’t assume that you can restrict access that was previously granted by an owner. This report can also explain how shared driveways or community parking lots will be used and maintained.
You have the dream, and we want to make it a reality. For assistance launching your first or next adaptive re-use space, connect with the team at Commercial Partners today at (612) 337-2470.