Insurance is something you never want to be without when you need it, but that doesn’t mean it is necessarily required in all instances. For example, while automobile insurance is needed to drive a car and a lender’s title insurance policy is typically required in order to secure a loan from a financial institution for your commercial purchase, an owner’s title insurance policy is not required. You are going to become the owner of the property once the purchase is complete, and if you do not want to secure a separate owner’s title insurance policy, you can decline the coverage.
But is it common to put money towards a commercial investment without an owner’s title insurance policy? What percentage of commercial investors purchase an owner’s title insurance policy for their property? We try to answer that question to the best of our abilities in today’s blog.
How Common Is An Owner’s Title Insurance Policy?
In our experience, it is quite common for a buyer of commercial property to also acquire an owner’s title insurance policy. In fact, it’s rare for someone to pass on it. However, we are also a full service title company that not only understands the benefits of an owner’s title insurance policy, we can also get our client set up with a cost-effective and comprehensive policy in short order.
Many people come to us because they know about the high level of service we provide to our commercial property buyers, so we’re not surprised that the vast majority of clients who choose to work with our firm understand the risk-benefit ratio associated with the decision to move forward with or without a title insurance policy. Given our experience, we are operating under the assumption that the vast majority of commercial property purchasers opt to make a one-time payment to secure lifelong coverage with an owner’s title insurance policy. But we do not know an exact percentage because that information is not easily accessible on the web.
Most of our clients secure an owner’s title insurance policy because they understand the unique risks in the commercial property space. Oftentimes they are working with much larger budgets than the residential real estate world, and there are a number of other aspects that aren’t always factored in when comparing the two markets. A commercial real estate investor may have to consider multi-family rental spaces, shared parking lots, driveways that access a neighbor’s lot, utility and government contracts associated with the land, zoning laws and environmental surveys, all of which can cause major headaches if you are not prepared for the unexpected. You can protect your financial interests by working with a title service company who can uncover these issues prior to your purchase and by securing an owner’s title insurance policy in the event that a problem is revealed one month or 20 years after you’ve purchased the property.
Peace of mind is everything for commercial investors and business owners, and the one-time fee associated with the owner’s title insurance policy can provide just that. Remember, your bank is going to require you to secure a lender’s title insurance policy to protect their interests, so it would be wise to follow in their footsteps and secure a policy for yourself.
In the end, it’s impossible to know the exact percentage of commercial property investors who secure an owner’s title insurance policy, but we expect that it is a significant majority given what we see on a regular basis. If you’d like to learn more about securing a policy or working with an experienced team to facilitate the purchase of your next commercial property, reach out to the team at Commercial Partners today at (612) 337-2470.