If you are fortunate enough to be gifted commercial property, you probably have a number of different things running through your head as you come to grips with the new acquisition. One such matter that you should get to sooner rather than later is securing title insurance. Without it, you could end up losing your property in the event someone makes a valid claim. In today’s blog, we explore when it’s wise to secure title insurance after being gifted commercial property.
Title Insurance On Gifted Properties
You may assume that a title insurance policy is not needed if you’ve been gifted commercial property. After all, you know who held the property before you, and there is no dispute during the transfer, so why should you pay to insure the property against title claims with an insurance policy?
For starters, there’s no guarantee that there were no pre-existing title issues with the property you’re being gifted. They may have originated with the person who is gifting you the land, or they may have even predated their ownership. Because these defects transfer with the property, not the person, these issues will become your problem once you’ve been gifted the property. If there is an existing tax lien associated with the property or a fence was built on a neighbor’s property, these issues become your financial responsibility once the property is yours, even though the issue did not originate with you. Commercial title insurance will protect you from any of these issues that begin prior to your take over.
Also, it’s quite common for title defects to be discovered during the transfer of ownership. Undiscovered issues may have remained dormant for years simply because nobody was looking for them. However, now that the property is being transferred and documents are being submitted and reviewed, an outstanding issue may come to light. The fact that there hasn’t been any known issues for years with a property doesn’t mean that they aren’t lurking below the surface.
The gift of commercial property is likely a welcomed blessing, but don’t let it become a financial headache because you didn’t secure a commercial title insurance policy to protect yourself from issues that arose prior to your ownership. This one-time policy will protect you for as long as you own the land, so it’s a small price to pay for decades of peace of mind. The team at Commercial Partners would be more than happy to help develop a fair and comprehensive title insurance policy if you’ve been gifted commercial property. Connect with our team today at (612) 337-2470.