Commercial properties present their own special set of legal pitfalls and complex dynamics for title agencies. Considerations such as tenant leases, EPA restrictions, etc. can, and often do, come into play and must be dealt with and resolved promptly, knowledgeably and, above all, with precise care and professionalism.
We’ve helped insure some of the largest commercial projects in the Mahoning Valley – projects that involve thousands of man-hours, multiple parcels of real estate, and several different law firms. From builders and developers to the lenders who help make big things happen, we help you grow and succeed by working with you to untangle the nastiest issues time and again.
Our commercial title services include:
- Title insurance, including Lender, Owner, and Title Guarantee policies
- Transfer of title information/requirements
- Escrow and closing
- Construction disbursing
- Special projects
- 1031 property exchanges
- UCC Insurance
- Land trusts
Commonwealth Suburban offers three types of commercial title insurance policies:
Lender’s Policy
The lender is typically required to have this type of policy to protect its own financial interests and legal defense costs, as well as reimburse any remaining mortgage payments you can’t make because you’ve lost the property over someone else’s claim. Lenders typically require buyers to cover the cost of this policy.
Owner’s Policy
An Owner’s Title Insurance (OTI) policy ensures that you are protected from any defects in the title that existed prior to purchasing your policy, such as liens, fraudulent signatures, improperly settled estates, or other encumbrances to the title.
Title Guarantee
A title guarantee protects the purchaser only from matters discovered on the examination of the record title, whereas, a title insurance policy insures certain defects that do not appear in the record examination.
Commercial Titles FAQ:
A commercial title typically refers to the official designation given to a commercial property and is the legal identification of the property for commercial purposes. The commercial title provides information about the ownership, boundaries, and any liens on the property. It is an essential document in real estate transactions to establish ownership rights and transfer property ownership.
Commercial and residential titles differ in the type of property they pertain to. Specific details and requirements of each title vary based on local laws, regulations, and practices. But here are some key differences:
Property Type: A commercial title is associated with commercial properties such as office buildings, retail spaces, industrial facilities, and other non-residential properties. In contrast, a residential title is associated with properties intended for residential use, such as single-family homes, apartments, or condominiums.
Zoning and Regulations: Commercial properties are subject to specific zoning laws and regulations that limit their use, construction, and operation. Residential properties are bound to rules specific to residential purposes, such as occupancy limits, building codes, and neighborhood restrictions.
Ownership and Usage: Commercial properties are commonly owned by businesses or investors and are used for commercial purposes, such as generating income or conducting business operations. Residential properties are primarily owned by individuals or families and are used as private residences.
Financing and Value: Commercial properties often require different financing options and may have other valuation methods compared to residential properties. Commercial properties are typically assessed based on potential income generation and market value, while residential properties generally are valued based on comparable sales in the residential market.
Title Considerations: Commercial properties may have more extensive title searches than residential titles due to potential liens, encumbrances, or easements related to commercial use, leases, or property rights.
The purpose of title insurance in commercial real estate transactions is not much different than in residential purchases. It protects the buyer and their mortgage lender from losing money due to previously unknown issues with the property title.
When a commercial property is purchased, a title search is conducted to uncover any existing liens, limitations, or legal issues that may affect the property’s title. Sometimes, there can still be hidden or unknown issues that may emerge in the future.
Commercial title insurance is designed to provide financial protection and peace of mind by mitigating risks associated with these potential title defects. It helps ensure that property owners and lenders have clear and marketable titles to the property, minimizing financial risks and potential disputes.
Commercial title insurance policies typically cover these scenarios:
Title Defects: Protection against undisclosed or undiscovered issues with the property’s title, such as outstanding liens, claims, or ownership disputes.
Errors in Public Records: Coverage for errors or omissions in public records, including inaccurate property descriptions, incorrect survey information, or clerical mistakes.
Invalid Documents: Protection against forged or fraudulent documents that could affect the property’s ownership.
Undiscovered Limitations: Coverage for undisclosed easements, restrictive covenants, or other limitations restricting the property’s use.
Prior Claims or Judgments: Protection against previous legal claims or judgments that may surface after the property’s purchase.
The specific process may vary depending on the jurisdiction and the practices of the title insurance company you choose, but to purchase commercial title insurance, you typically follow these steps:
- Engage a Title Insurance Company: Contact a reputable company offering commercial title insurance services.
- Provide Property Information: Provide the necessary information about the commercial property for which you need title insurance, such as property address, legal description, purchase price, and any relevant documents or records.
- Title Search and Examination: The title insurance company will conduct a thorough title search and examination of public records to identify potential issues or risks associated with the property’s title.
- Insurance Proposal and Premium: The title insurance company will provide you with an insurance proposal outlining the coverage and terms of the policy.
- Review and Underwriting: Review the insurance proposal, including the coverage, exclusions, and special conditions. If you accept the proposal, the title insurance company will underwrite the policy, which involves assessing the risks and determining the final terms.
- Closing and Policy Issuance: The title insurance policy will be issued once the commercial property purchase is finalized. At the closing, you will typically pay the premium amount, and the policy will become effective.
