The team at Commercial Partners can assist with many aspects of your next commercial purchase, but one of the first things we do when you bring us into the fold is research the title of the prospective property. This helps a buyer learn a lot more about a potential property than they’d be able to find out on their own, and that can make a huge difference when it comes time to negotiate certain aspects of the sale. We provide this information in what’s known as a preliminary title report.
But what exactly can you learn from this preliminary title report, and what purpose does it serve during the purchasing process? We explore the true purpose of a preliminary title report in today’s blog.
What’s In A Preliminary Title Report?
A preliminary title report acts as a resource for both the buyer and the seller by identifying any potential claims or issues attached to a property before closing. Think of it as a map for helping you get from Point A to Point B. If you identify the best way forward and avoid potential obstacles, you’ll be able to reach your destination with ease.
Here are some of the basic purposes of a preliminary title report:
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Reveal Title Issues Early - Your preliminary title report will identify defects with a title that could impact your ability to close. Problems like unpaid property taxes or existing liens can end up tanking a sale. Identifying these issues early and ensuring the seller takes care of any of these issues will help keep the sale on track. It also helps the buyer understand some of the things the seller needs to take care of before closing.
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Reveal True Ownership - A scammer may try to claim ownership of a property and get you to transfer them money as part of a purchase agreement before you realize that you’re not dealing with the true owner. A preliminary title report can help you avoid being scammed. Moreover, a preliminary title report identifies all named parties on the title so that there aren’t any delays at closing if an ex-spouse is still named or a property is actually held jointly by three siblings.
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Determine Easements And Restrictions - The preliminary title report will also identify any easements or other restrictions associated with the property. If a utility company has a standing agreement to access their equipment on your property, or a neighbor has access through a field or with a shared driveway, you’ll want to know about these agreements, because they typically stay in place even in the face of a transfer of property ownership. This way you know who may have access to your property, and exactly how they are allowed access if for specific purposes.
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Establish Criteria For Title Insurance - Commercial title insurance is typically required if you’ll be financing your purchase from a bank or similar lender. This report serves as the basis through which a title insurance policy will be formed. Your title insurer can get an in-depth understanding of the property through this report and use it to establish a fair one-time premium for your title insurance policy.
A preliminary title report brings transparency to the buying process, which is essential when hundreds of thousands of dollars or more will be changing hands. Let us create this report for you and assist with other helpful steps along the way as you work to secure your first or simply your next commercial purchase. For more information, connect with the team at Commercial Partners today at (612) 337-2470.