Aspects of Commercial Real Estate Transactions

Title insurance is one of the critical aspects of commercial real estate transactions. Without title insurance, both the buyers and sellers would most likely find the risks of buying and selling property too high.

Because the amounts of money are significant, financial transactions are more intricate. Title insurance plays a dynamic role in buying and selling commercial real estate transactions. The Buyer in the real estate transaction purchases the Title Insurance for the Lending Institution. In Florida, the Seller, selecting the Title Agency, pays for the Owner’s Title Policy.  The Buyer can also choose the Title Agency; however, they must pay for their own Owner’s Title Insurance. 

From the position of marketability, suppose a seller claimed to own title to the property, and later a third party claims that they had similar rights to the property and not the Seller. In that case, the title insurance will protect the Buyer. The title search does more than trace ownership; it looks at liens and other encumbrances, such as judgments against the property. Title agents also often act as escrow agents in commercial real estate transactions. All participants in the transaction, the Buyer, Seller, and lender(s), all have a vesting interest in smoothly completing the title insurance issuance.

Title Report

The title agent informs the buyer and seller of the status of the title search. Hence, all parties are aware of the time and communications about the issuance of the preliminary report. One of the most critical documents in the entire commercial real estate transaction is the preliminary title report. The preliminary title report will make a statement about the property’s marketability.

Title Policy

Suppose the report finds that the Seller does not have a clear title they thought they owned. In that case, the Seller can review the title insurance policy they received when they purchased the property. A seller doesn’t have ample time to make objections to the preliminary title report. When the report is accepted and the title commitment is issued, the rest of the transaction will close quickly. The title insurance agent, also the escrow agent, will transfer the funds to the Seller and the executed title documents to the Buyer.

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