It’s no secret that commercial real estate is a competitive market. Each commercial real estate transaction carries a fair amount of weight, and brands need to protect their commercial property investments. That’s why title insurance exists and why it continues to benefit buyers and sellers across the country.
Since around 1874, title insurance has helped mitigate commercial real estate transaction risks in the United States. Otherwise, many buyers and sellers would find the risks and vulnerabilities too great. If you’re looking to grow a commercial property agency or expand your business, here’s what you need to know about title insurance.
What is title insurance?
Commercial title insurance protects buyers by incorporating a chain of title to a specific piece of real estate or commercial property. You can use a title insurance policy for both residential and commercial real estate transactions. However, the title insurance policy is equally useful for each. Since real estate transactions handle larger sums of money and are also more intricate transactions, on the whole, buyers and sellers depend on this insurance to benefit property exchanges.
Depending on your specific needs, you’ll probably work with a title company. Title companies offer tailored insurance products that can benefit almost any commercial transaction. Since the commercial real estate industry, in particular, works with large sums of money for transactions, buyers and sellers commonly turn to title companies for that added peace of mind. When you’re looking for a title insurance company, you’ll probably want to search for one that has local endorsements and can protect you against any existing or future title vulnerability.
How does title insurance work?
In your average buying and selling process, the title is the right to own a parcel of land or real estate. Deeds, on the other hand, convey the title between the buyer and the seller. However, not every deed conveys full ownership, which can lead to title issues. Beyond that, liens can limit your real estate ownership rights, complicating the entire buying, selling, and closing process.
When you’re working with a title insurance company, you’re buying insurance that a property’s title is as promised. For example, say a seller says they’ve conveyed a full and clear title to the buyer during the closing process. Later, another individual or third-party representative claims rights to the property. Title insurance protects you in these cases. While they might seem uncommon, title disputes happen more often than you might suspect, even with commercial titles.
One thing that title insurance doesn’t cover is possessions and belongings. You’ll need a separate owner’s policy for your range of devices and material goods. Unfortunately, title insurance won’t cover your Western Digital My Cloud device or other products within the home or commercial property. If a third party claims ownership of these, it can lead to an ongoing dispute.
Title insurance is an industry standard.
No matter your loan policy setup, your preferred escrow service, or title search service; You need to have title insurance if you’re handling commercial real estate. Find the right provider and set up a policy when you can. This will protect you and your affiliates during real estate transactions. It’s also a good idea to store important documents and information in a central place for easy reference. This includes your title policy, any warranty information, post request forms, and more.
With the right insurance, it’s easier to navigate your commercial real estate deals. Without the encumbrances of potential title or property disputes, most commercial real estate deals should proceed smoothly. Whether it’s a loan title insurance policy or the owner’s title insurance policy, ensuring you’re protected is an integral part of the industry.