While many real estate agents and commercial property owners understand the importance of title insurance for commercial properties, there are many businesses that skip the extra fee and end up paying for it later. Since the 1870s, title insurance has protected commercial real estate buyers from financial risk.
Commercial Property Title Insurance
Just like with residential properties, commercial title insurance protects the property owner from the financial devastation that problems with the chain of title or liens could cause. Because the cost of commercial property is typically much higher and the real estate transactions are more intricate, title insurance is vital for commercial properties.
What Will Title Insurance Guard Against?
Whenever you purchase a commercial title insurance policy, you are buying insurance that the property’s title is exactly as the seller promised. If the commercial property seller claimed that the title was full and clean but a year down the road another party claimed full ownership of the property, title insurance will work to protect the buyer. While every title insurance policy differs slightly based on state regulations, most policies will handle legal fees over the title disagreement and, if the third party is the rightful owner of the property and wins the legal fight, title insurance will reimburse the buyer.
Why Buys Title Insurance?
If a lender is part of the commercial transaction, the buyer will typically cover the loan’s title insurance policy for the lender. In addition to the lender’s policy, the buyer will also purchase an owner’s policy. In some cases, the property seller will cover this cost as part of closing. In many cases, the property paying for the title insurance policy is not always the one that benefits!
What Happens If a Problem Arises?
Most insurance products work by protecting you against the future. Title insurance works by protecting you from something that might have already happened in the past. If a problem with ownership or the title occurs and you have title insurance, you will file a claim with the title insurance company. In most cases, the company will then investigate the validity of the title challenge and defend you against it (including in court). A commercial real estate attorney will work to bring an end to challenges before they stretch into lengthy court cases.
A Smooth Commercial Property Buying Process with Homeland Title & Escrow
Homeland Title & Escrow offers a broad range of title services, including complimentary consultations for first-time homebuyers. To learn more about our services, give us a call at (410) 544-6700.