It is not at all uncommon for commercial real estate transactions to be complex. These properties have usually been around for a while and have likely changed ownership several times, undergone renovations and zoning changes, and had many different mortgages along the way.
All of this activity increases the chance that something may interfere with having a clear title. And while a thorough title search by those who are skilled in the field is imperative for a successful closing, it still does not remove all the risks involved.
You’re going to want the protection of title insurance.
Understanding Title Insurance
Consider title insurance to be like any other insurance policy as it offers you protection. Except, instead of protecting you from things that may happen in the future, it protects you from issues that have happened in the past – before you took ownership. It is a requirement for those purchasing real estate within the state of Florida.
A title is what gives you the right to own a piece of commercial real estate whereas the deed is the physical document stating that you do. Though, just because you have a deed does not mean you have rights to the property. Before that can happen, the title needs to be clear of any encumbrances from the previous owner.
Just in case anything is missed, you have title insurance to protect you. Should any title issue arise in the future, having a title insurance policy means you won’t be left funding the fight for your right to title.
What happens if you don’t have title insurance for your commercial property? Your rights to the property could be in jeopardy as you may find yourself in a costly – potentially legal – battle for the property. And there is still no guarantee you won’t lose the property.
How Title Insurance Works
Before you can purchase a title insurance policy, the title company will perform a title search. This is when a title examiner will review all the public records and legal documents associated with the subject property. They are looking for things such as transfers, judgments, liens, outstanding taxes, bankruptcies, encroachments, and the like.
Once the search is completed, a title report will be issued. This will state whether or not there are any issues with the title – and what needs to be taken care of to ensure that the title is free and clear in time for the closing. It will also state that a title insurance policy will be issued as long as any and all conditions listed in the report are met.
Title Insurance Protects Commercial Property
When investing in a piece of commercial real estate, the stakes are often high – aside from the fact that they often involve large sums of money. For instance, rather than one person, a couple, or a family having a vested interest in it, there are often many others in the background of this commercial transaction.
What’s more, by the time the property reaches the closing, there are usually plans in place for the property just waiting to be put into action once the real estate transaction deal is closed. If a lender is involved, then they are going to want to ensure that they are protected, too – especially since they are taking a great risk in giving you a loan.
All of these factors come together to make a case for why title insurance is so important when investing in commercial real estate.
Learn More About the Importance of Title Insurance
If you are investing in commercial real estate, you will not want to dismiss investing in a title insurance policy. Why? Because that means risking your rights to your commercial real estate.
Learn more from the experts at Florida Title Center.
Contact us today at 954-848-224.
