It can be quite surprising and a bit anxiety-inducing to find out that someone is making a claim on property you believe is yours. Whether that is a bitter former spouse, a long lost potential heir or a scam artist, it can be difficult to know how to proceed if you get a letter or email notifying you that someone is claiming that your property is actually their property. In today’s blog, we explain what you should do if you find out somebody has made a claim on your commercial property.
Steps After A Claim Has Been Made On Your Commercial Property
If you’ve been notified that another party is claiming ownership of what you believe to be your property, what should you do next? Your next steps really come down to whether or not you prepared for this possibility before it became a reality. Let us explain.
During the course of acquiring your commercial property, you would have been told about your options for purchasing title insurance. Lender’s title insurance was likely required if you were seeking a loan from a bank or similar financial provider, but you also had the option to purchase owner’s title insurance. Owner’s title insurance is a one-time fee that protects your financial interests in the event that someone makes a claim on your property, and this protection lasts for as long as you own the property. That means if someone makes a claim on your property one day or 40 years after you’ve acquired that commercial property, that one-time title insurance policy will keep you protected.
We highly recommend this policy to anyone considering buying commercial property, because it is such a cheap way to purchase an immense amount of peace of mind and financial protection. Unlike health insurance or automobile insurance that require annual premiums, title insurance is a one-time fee that continues as long as you hold the property. In fact, that same title insurance policy can even protect your heirs in the event that you die and the property passes down to them. Title insurance protections only really end when you refinance your loan or sell your property, so you can get decades and even generations of coverage with just one policy.
But back to the question at hand. If you are informed that someone has made a claim on your title, and you have a title insurance policy, all you need to do is inform your title insurance policy company about the claim. This company did an incredible amount of research to ensure there were no obvious claims on a property before issuing you a policy, and they will be ready to stand up to any challenges to your commercial property. While they may have a few more instructions for you over the phone, the fact of the matter is that once you’ve informed them of the claim, your work is essentially done. They’ll take care of it from there, and no matter how it all plays out, you know that your financial interests are protected because of the policy.
If you don’t have an owner’s title insurance policy when you are informed of a claim on your property, life will become a lot more complex. You’re essentially on your own for sorting out the claim, and all of the expenses associated with this will come out of your pocket. Court costs and fees associated with hiring a lawyer to help prove your case will all be expenses that you’ll need to pay for, and although you may be awarded some damages if the claim is proven to be false, at a minimum you’re going to lose a lot of time fighting this claim, and in the commercial real estate world, time is money. If the claim end up being valid, you may lose the property despite all the hard work you’ve already put into it.
To make everything much simpler and to always have peace of mind about your property, we highly recommend purchasing an owner’s title insurance policy for your commercial properties. Like other forms of insurance, nobody expects to have to lean on a policy, but you’re thankful it exists when the need arises. Protect yourself and your family through a title insurance policy.
The team at Commercial Partners can help with a number of aspects associated with your next commercial real estate purchase, including title searches and the issuance of a title insurance policy. For more information, reach out to our team today at (612) 337-2470.