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Commercial real estate transactions usually involve extensive research and mounds of paperwork.
Multiple owners, renovations, and zoning changes can muddy the waters, making it difficult to discern their true ownership. Fortunately, title insurance unravels the complexities and provides the necessary proof of the right to possess and use the land. Commercial title insurance is smart investment that provides peace of mind for commercial property buyers.
If you are considering a commercial property purchase, read on for six important facts about this valuable form of insurance.
- It offers protection from what may have happened in the past.
Other types of insurance protect against circumstances that might occur in the future. For example, auto insurance offers protection in the event of an accident. Title insurance is the opposite, protecting buyers against situations that may have occurred in the past, like unpaid taxes or liens against the property, which could prevent obtaining a free and clear title.
- Commercial title insurance is comprised of two different types of policies.
Like residential title insurance, commercial title insurance includes lender’s loan policies and owner’s policies. Loan title insurance policies are designed to protect the investment of the bank or other lender should any problem with the title surface at a later date. The owner’s title insurance policy protects the buyer or owner of the property should title issues arise. Because commercial real estate deals typically involve large amounts of money, complex transactions, and complicated histories, title insurance is a value-added safeguard.
- It can reveal past problems.
Every title insurance policy begins with a title search. This search discloses the background of everything that has been recorded on the property, such as deeds, mortgages, and easements. It also reveals potential problems involving the title. For example, the search may show that a contractor has filed a lien on the property because they weren’t paid for work performed there in the past. If issues like these are uncovered during the search, they can be addressed prior to closing.
- Title insurance safeguards your investment.
Without a title insurance policy in place, a commercial property investment could be vulnerable to potential issues and claims. For example, if someone files a claim on your property, even if it’s an illegitimate claim, you may have to pay for the legal fees required to defend your ownership rights. With a title insurance policy in place, however, your title insurance partner will address any issues that arise.
- It typically offers protection against loss from a variety of situations.
Every title insurance policy is different and is based on the property, the needs of the buyer or seller, and the specific terms of the transaction. However, title insurance usually provides protection against loss that may arise from:
- Unknown title defects that could prevent clear ownership of the property, such as title fraud, as well as forged, unauthorized, or improperly indexed deeds
- Unrecorded liens like unpaid taxes, utilities, and mortgages
- Encroachment issues such as boundary descriptions that are inconsistent with the area in question
- Incorrect or inadequate legal descriptions and errors in public records
- Title agents play a critical role in commercial real estate transactions.
Acting as an impartial third party, they ensure the title search is conducted accurately and in a timely manner. Title agents also review all title work, legal descriptions, and surveys, responding to comments and objections that may put the title in question or delay the closing. These professionals also maintain open channels of communication with clients, municipalities, surveyors, underwriters, and outside agencies to expedite the closing process.
If you have questions about title insurance or the title process, you’ve come to the right place. The knowledgeable experts at Certified Title are here to help you successfully navigate the complex title and escrow landscape and ensure a smooth, streamlined commercial transaction process. To learn more, please contact our helpful team of professionals.
About Certified Title Corporation: Since 1994, attorney-owned Certified Title Corporation has been furnishing residential and commercial real estate stakeholders across the nation with robust title insurance, settlement, and escrow services. Renowned for their industry-leading reliability and exemplary level of service and quality, the Maryland-based company helps clients from all walks of life achieve their asset goals. To learn more, call (888)486-5511 or visit https://www.certifiedtitlecorp.com/.
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