We understand that nobody likes paying for any type of insurance policy that they don’t end up using, but if the alternative is not having coverage, it’s almost always better to be protected. However, when it comes to title insurance, there is sometimes another option that can be considered. In today’s blog, we discuss an alternative to title insurance, and we explain why it’s not typically an ideal pursuit.
A Potential Alternative To Commercial Title Insurance
A commercial title insurance policy is now considered the standard move to protect yourself and your property against an unexpected claim, but it isn’t your only option. Prior to the rise of commercial title insurance, sometimes a commercial investor would obtain what’s known as an attorney opinion letter.
An attorney’s opinion letter is a written opinion drafted by a lawyer that details the researchable status of a property’s title and ownership. A lawyer will do a lot of the same things as a title service company would do when researching a property as part of developing an insurance policy. They’ll review public records, discover recorded easements and encumbrances and basically research the property to the fullest extent so that a buyer learns as much as they can about the property.
However, this letter offers little in the way of protection to the buyer in the event that a hidden title defect eventually comes to light. The attorney is doing everything they can to discover issues with a property, but it’s impossible to have access to every document or know some of the other problems that could lead to title issues, like will discrepancies or long-lost heirs. If a hidden issue comes to light, there may be no recourse for the property owner if it is a valid claim against their property. Even if it turns out to be an invalid claim, the costs associated with defending your property from the claim will come out of your pocket.
An attorney could be held accountable for negligence or clear and obvious errors of fact that go against public records, but oftentimes it’s the hidden issues that end up causing problems, and you’ll have no recourse against a lawyer when this happens. Since a lawyer does not have the financial backing to insure their letter, you’re really not getting much in the way of a guarantee.
So while an attorney’s opinion letter used to be a bit more common of a way to provide some peace of mind about the viability of property’s title, it’s given way to a much more secure form of protection in the title insurance policy. Let our team of researchers conduct our title search and develop a policy that suits your needs and offers you plenty of financial protection. For more information, or for help with a different aspect of commercial real estate acquisition, reach out to the team at Commercial Partners today at (612) 337-2470.