Nothing tanks a commercial real estate purchase faster than the discovery of an ownership dispute during a title search. After all, you don’t want to purchase a property only to find out that someone else believes they have a valid claim to part of all of your property. These ownership disputes will not go away simply because someone came along and bought the property, so it’s imperative that you discover any potential ownership disputes and work to see them resolved well in advance of closing.
But what type of ownership disputes may you run into when conducting a comprehensive title search? In today’s blog, we take a closer look at common ownership disputes that can cloud a title.
Types Of Commercial Property Ownership Disputes
There are a number of different ways that someone else other than the person selling the property can make a claim that they actually have rights to the property. Here’s a look at some of the more common ownership disputes discovered in a title search:
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Divorces - Whether it’s amicable or contentious, there’s always a possibility that a couple did not finish what needed to be done to have one party removed from a property’s title. Also, it’s possible that both former spouses believe they are entitled to the property, or one is trying to make a quick sale to spite the other. If a former spouse still is named on the title or the ownership rights have not been explicitly declared in a divorce settlement, it’s possible that you may need to have the seller reconnect with their ex to settle the outstanding matter.
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Wills & Inherited Property - We like to imagine that our will makes it pretty easy to divide our assets among living beneficiaries, but that’s not how it always plays out. Parties may dispute the findings in a will, or the deceased may leave a property to multiple parties. Perhaps the property was left to the five surviving children, and unless all five are on board with the sale, that last holdout may end up making a claim on your property down the road. Your title services company will work to establish a clear chain of custody for titles on inherited or willed property to ensure there are no disputes among surviving family members or potential heirs.
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Neighbor Disputes - Sometimes the dispute isn’t about the entire property, rather it involves a small section of disputed land. The seller may believe they own part of a property, while the neighbor may believe a boundary survey actually proves that they own the disputed land. A title search will involve a boundary survey to determine exactly where the lot lines are and what is enclosed within this space. If the survey is different than what the seller suggests it is, you’ll want to ensure any disputes with neighbors are settled before you close.
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Impersonation - Another rare issue that you’ll need to watch out for is the possibility of a scam or impersonation. Scammers may attempt to impersonate the seller, either digitally or even physically, and it’s possible that you may attempt to buy a property from a person who actually has no right to sell it to you. A title search can ensure that you are working with the person who has rights to the title so that you know you’re working with the right seller.
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Liens - Finally, a title search will review the property for the existence of any liens. Perhaps there are unpaid property taxes or an unpaid mechanic’s lien associated with the property. And while these liens may not be contesting ownership of the property, they are claiming financial repayment from the owner, and if you become the new owner before these debts are settled, you may be on the hook to settle these liens. Make sure any and all liens are settled prior to closing or a clause is in place to settle them with funds the seller receives at closing.
Let us help discover and settle any potential ownership issues prior to closing on your next commercial property. For assistance with any aspect of the title search process, reach out to the team at Commercial Partners today at (612) 337-2470.