Commercial property investment attracts buyers of all types. You have your first-time investors, your seasoned veterans, investment groups, small business owners and foreign investors to name a few. We’ve helped all these groups secure commercial property and clear titles, but working with each of these groups presents its own diverse set of challenges. In today’s blog, we take a closer look at some potential title-related pitfalls based on commercial buyer type.
Potential Title Problems For Different Investors
Let’s quickly break down some of the potential challenges these different groups may face based on their unique circumstances:
- First-Time Investors - These green investors may be eager to invest in the growing commercial space, but their lack of experience in the space can hurt them. They may assume they have a good understanding of commercial property acquisition because of their experience purchasing residential space, but these two markets are quite different. This group is also more likely to waive surveys, miss deadlines during the due diligence stage and overlook local zoning ordinances. We can help ensure your first commercial purchase goes smoothly.
- Veteran Investors - Familiarity in the commercial space is certainly helpful, but it can also lead to complacency. Every commercial purchase is different and presents unique challenges, so don’t assume the next purchase will be easy because the last one was. If this group is buying commercial property in a different state, they may assume that the same laws and regulations apply, but these can vary state by state. There are fewer issues with veteran commercial investors, but that doesn’t mean you shouldn’t connect with a title team to assist with the process.
- Investment Groups - Investments groups may have the capital to move forward with a commercial purchase, but they may lack the leadership and ability to move forward with a clear vision. This can cause deadlines to be missed, special insurance requirements to be overlooked and issues when it comes time to transfer a title to a specific person or entity within the investment group. Fortunately for these groups, a title service company can act as this de facto leader and assist with many of the issues these individual investors would rather not deal with.
- Small Business Owners - Small business owners looking to expand their business or their business portfolio may look to commercial investment. There are a number of issues that small business owners will want to ensure are investigated during the due diligence stage, like land surveys, environmental use surveys, easements and access to shared driveways and parking lots, zoning laws, building restrictions and lease terms, to name a few. It’s easy for one or more of these key aspects to get overlooked, and a title service company can ensure nothing is missed.
- Foreign Investors - Foreign investors face some unique challenges as well. Money transfers and foreign exchanges can lead to delays with closing even when the process is started in advance of the closing date. There’s also some specific laws that apply to these types of investors, including FIRPTA, which stands for the Foreign Investment in Real Property Tax Act of 1980. Their lack of familiarity with local laws and regulations can make commercial purchases difficult, especially if they can’t regularly visit the area they are looking to purchase property. A title service company can act as your boots on the ground in these situations.
Let our team handle any and all challenges you may face with your next commercial purchase. For more information, or for help with a different commercial real estate issue, connect with the team at Commercial Partners today at (612) 337-2470.