We all want to know that we are spending our money wisely, which is why we often research big purchases before we pull the trigger. Because of this, it stands to reason that you should really research a property before you make an official offer. But is this how it works in the world of commercial real estate? In today’s blog, we explain why title searches aren’t typically conducted until after you have an accepted offer.
When Is A Title Search Conducted?
It makes sense that you’d want to conduct a title search and learn more about a prospective property before you officially write up an offer, but that’s not how the process usually goes. After all, if you’re potentially looking at multiple properties, it would be very time consuming and very costly to perform a bunch of surveys and research on properties that you ended up not offering on or were outbid on. To save you time and money, we typically wait until an offer is accepted to begin a deep dive with a title search.
But if you can’t look into a property until you get an accepted offer, how can you protect your interest in the event that a problem is discovered? For starters, any offer your write should contain contingencies that will allow you to walk away from a deal without penalty. You can write it in an offer that any title clouds allow you to renegotiate a deal or recapture your earnest money without penalty if you choose to walk away. You can take solace in knowing that even though you can’t have your title team investigate the property until you have an accepted offer, you won’t be any worse off if defects are discovered because of simple contingencies in your offer.
Another way to protect your financial interests is by securing title insurance after you’ve closed on the property. An owner’s title insurance policy offers you financial protection in the event that a title claim is made against the property once you become the owner. Your title service company will do everything in their power to discover these title clouds prior to closing, but oftentimes it’s impossible to know with 100 percent certainty that no outstanding issues exist. A will could be unclear, a property tax lien could be discovered or a previous sale may be questioned because of a contested divorce. You hope these issues never arise, but in the event they do, you can protect yourself with the help of an owner’s title insurance policy.
We know how important it is to be financially protected when you’re making an extremely large purchase on a commercial investment, and we can assist with this process. Let us investigate a property after getting an accepted offer and set you up with a title insurance policy after you’ve closed for full financial peace of mind. For more information on how we can do this, give our team a call today at (612) 337-2470.