In a perfect world, you would sell one property and purchase another property at the same time, using the funds from your sale to put towards payment of the new property. Unfortunately, we don’t live in a perfect world, so it’s not uncommon for the dates of a purchase and a sale to be off by a bit. If you end up in a situation where you’re purchasing a commercial property before you sell off your property, you may need to secure what’s known as a bridge loan.
A bridge loan is a short team loan that helps to “bridge” the time between purchase and the sale of your property. These bridge loans are designed to be paid off quite quickly, usually within 3-12 months. Because they are supposed to be paid off in short order, they also tend to come with high interest rates, which means an issue with the sale of your property can be quite costly if it forces you to maintain their bridge loan for longer than expected. You can avoid some common delays that could cause you to extend your bridge loan by connecting with a title services team.
Avoid Delays That Could Extend Your Bridge Loan
Title issues are the most common reason that an individual fails to secure a bridge loan or has to extend the loan beyond when they had hoped to pay it off. Whether that issue is with the new property or the property you are looking to sell, title issues can cause problems for the unprepared. Common title defects that could cause issues for your bridge loan include:
It’s not so much that these defects exist on a title, it’s that the buyer or seller may not be aware of their existence until the sale process is pretty far along. When these issues are found in later stages, it can take some time to clear them, which could cause delays in securing to paying off your bridge loan.
The simplest way to identify potential threats to staying on schedule with the purchase or sale of a commercial property is to connect with a title services company like the team at Commercial Partners. As soon as you bring us into the fold, we get to work researching the property in question. We dive deep into title research to uncover any potential defects that need to be rectified before the sale can go through, and we also identify other potential issues with a property, like zoning concerns or land surveys. Our goal is to keep everything on track and prevent unwanted surprises, which is exactly what you need if you’re looking to secure or pay off an expensive bridge loan with a high interest rate.
We can also assist as the closing date approaches by managing the escrow portion of the transaction. Knowing that your funds are being held securely and can be dispersed swiftly to the other party ensures there are no surprises when it comes time to send or receive money included in a sale. There are more bad actors in the commercial real estate space than many realize, and if you trust your money to the wrong entity, you could end up on the wrong side of a scam.
Bridge loans offer much needed financial flexibility when navigating the process of buying a property and selling another, but they come with risks that could prove costly if you’re not prepared. Let us make sure the whole process runs smoothly and you not only secure your loan, but pay it off as expected. You may more than pay for our services simply by avoiding costly delays with your bridge loan, so let us help you with your next commercial purchase and sale. For more information, reach out to the team at Commercial Partners today at (612) 337-2470.