We’ve talked about title insurance with great frequency on our blog, and rightfully so, because it is such a valuable commodity when purchasing commercial property. Title insurance protects you against unexpected claims or liens on your property that may be discovered weeks or years after you acquire the property, and the one-time fee has the potential to save you hundreds of thousands of dollars or more. It’s something we highly recommend for both first-time or seasoned commercial investors.
Sometimes during an acquisition, a client will ask if title insurance is something they can purchase later if they choose. In today’s blog, we explain whether or not you can purchase title insurance after you close on a property.
Purchasing Title Insurance After Closing
If you’re simply here for a yes or no answer, the answer is yes, you can purchase a commercial title insurance policy after you close on a property. You can purchase this policy days, weeks or even years after closing, and we can help you secure the policy.
With that said, waiting to purchase title insurance until after closing is not the best idea. We understand that you may be trying to manage costs associated with the acquisition, but it can be very risky to put off purchasing commercial title insurance until after closing. The main reason for this is that shortly after closing is the most common time when an unforeseen claim on the property is made.
The process of a sale oftentimes kicks the proverbial beehive in regards to potential issues with a property. Public records will be researched and updated, property lines will be examined, surveys will be conducted and long-lost heirs are more likely to come out of the woodwork upon learning that a property that they believe is linked to their family is being sold. That’s not to say that right after closing is the only time when an issue may arise, but it’s far and away the most common time for them to come to light, so that also ends up being the time when having insurance coverage is most important.
In fact, you’ll likely be required to purchase one type of title insurance before you can even legally move forward with the sale. Most financial institutions require that a lender’s title insurance policy is purchased before they will provide financing for your loan, so you’ll already need to purchase a one-time policy if you’ll be getting a loan. If the bank realizes how important it is to have their financial interests covered, it means you should follow suit and purchase a one-time owner’s title insurance policy that protects your financial interests.
So yes, you can certainly purchase a title insurance policy after you’ve closed on a commercial property, but we really don’t recommend changing it and going without insurance protection if at all possible. Even if you’re purchasing the property from your family and you think you understand the boundaries and believe it has a clear title, the peace of mind you receive from an owner’s title insurance policy cannot be understated. Let us help protect your family and their financial interests by acquiring this policy that can protect you for as long as you own the property.
For more information about commercial title insurance or commercial property acquisition, reach out to the team at Commercial Partners today at (612) 337-2470.