After spending a substantial amount of your time finding the right piece of Texas commercial property, you want the transaction to go smoothly and well. The last thing you want is to discover some potentially costly issue at some point in the future.
For you, this may mean making sure the property is properly zoned, and that your financing comes through without a hitch. While these issues are critically important, you also need to consider that the deed to your new property may not be enough to ensure you actually own the property.
Where title insurance comes in
Let’s face it, you aren’t buying a “new” piece of property. It may have changed hands numerous times over the last 150 years or so, and you need to ensure that you will own it without any impediments after your transaction closes. For this reason, a title search and title insurance are absolutely necessary. This insurance doesn’t give you protection from future events, but instead, from those in the past.
Commercial title insurance comes in two different types — one for the lender and one for the owner. Each protects the insured from defects in the title, zoning issues, boundary mistakes and environmental issues. More specifically, most policies cover the following:
- Unpaid taxes
- Unpaid work orders, i.e., mechanic’s liens
- Unpaid mortgages
- Inadequate or incorrect legal descriptions
- Errors in the public record
- Unauthorized, fraudulent, forged or improperly indexed deeds
- Inconsistent boundary descriptions
A title search should identify any of the above issues. If one or more does exist, it may be possible to “clear” the title through a quiet title action. This legal proceeding essentially erases the defect from the title so that you can rest assured that you own the property without any encumbrances. It also helps make sure that no one else can come back at a future date and claim ownership of the property.
Handling issues with the title to your property
The above description of clearing the title to a piece of property, whether commercial or residential, is a simplification of the process. In reality, the process can become quite complex. In addition, title insurance companies do sometimes miss something. Another pair of eyes to review the title search wouldn’t hurt. If any issues do arise, it would be in your best interest to protect your investment by enlisting the aid of an experienced real estate attorney to assist you.