The world of real estate and the products you need to navigate without an expert’s guidance can seem confusing, even overwhelming. If you’re looking to buy or sell commercial real estate, you might wonder if you should work with a title company to help ensure that the deal goes smoothly from start to finish. This article will explain everything you need to know about commercial title insurance and how this type of coverage can protect your investment and peace of mind when buying or selling commercial property.
What is a Commercial Title Insurance?
Title insurance protects your interest in a property by covering your financial risk of loss due to issues with the title. Title insurance policies differ in scope, coverage, and price depending on the type of property you’re insuring and where it’s located. If you’re wondering whether or not you need commercial title insurance and what to look out for when shopping around, here are a few things that explain what you need to know about commercial title insurance.
Type of Title Insurance
When purchasing a commercial property, the lender and buyer should each purchase a separate policy to insure the title of the property. Many commercial lenders are required to take out title insurance in order to get loans; just in case there are problems with the title, the lender is still protected from any financial risk. Second, the buyer of a property should also purchase insurance from a title service. Separate from the loan offered by the lender, this policy will protect the business financially in the event of title problems.
Title Search
Before you make any major purchase, like a piece of real estate or a vehicle, have your title searched by an escrow agent. A title search involves verifying that there are no liens, such as mortgages or unpaid loans, on your property. Your title company will walk you through all of your options and ensure you make an informed decision before taking action.
Title Commercial Insurance is Paid Once
The title insurance policy is generally a once-and-done payment, so it isn’t something you need to continue paying for month after month. The escrow agency will hold onto the funds while you're in the process of purchasing the property. Before signing the closing documents, the title insurance company will have been paid.
It Protects Your Investment
An escrow agency or title company offers a variety of title services for your commercial real estate. Commercial title insurance protects both the owner and the lender as long as you own the property, or, in the case of the lender, as long as there is a loan out on the property.
