All real estate purchases can come with risks, but commercial deals can have more complications, depending on the circumstances. Buying commercial properties can require more extensive due diligence because it may have more considerations. Some components not usually considered when buying residential properties, such as market shifts, land use and zoning requirements, may also be relevant, primarily if the property is meant for varying business operations.
Title issues and defects may also arise before or after closing the sale. These issues can lead to challenging situations, derailing sales or affecting ownership rights years after finalizing the purchase. Title insurance can be helpful during these scenarios because it can cover various costs and losses, including the following:
- Undetected liens, overdue taxes and other costs left unpaid by previous owners
- Legal defects caused by fraudulent or forged documents, possibly impacting the ownership’s validity
- Expenses associated with encumbrances, easements and other problems that can affect the property’s value
- Costs brought about by issues due to paperwork errors during closing
Title insurance can help protect parties involved in the commercial transaction, including lenders and property buyers. Usually, there can be a lot riding on commercial transactions, making it reasonable for lenders to require extensive coverage based on the situation.
Securing commercial transactions
Any commercial real estate transaction can be more complex, putting involved parties in challenging positions if something goes wrong. Unexpected issues can result in severe losses and expenses, depending on how much work is necessary to resolve them.
To address these risks, buyers can seek legal counsel early in the purchase. Doing so can help buyers navigate the process and determine options for protection during and after the transaction.