Looking into buying a new property for your business is a big step, but as you review these commercial properties, one thing you have to remember is that they could have liens or other issues with their titles. If there are defects with the title of a property, the entire purchase could be disrupted, which is why it’s important to have the title checked as soon as possible.
Title searches are performed by title companies or attorneys who start looking at the data from the current owner and then work backwards.
What should you expect from a preliminary title report?
In a preliminary title report, you will receive information on the current owner of the property. This report establishes who legally owns and may sell a property.
Other items that are included on the preliminary report include:
· Conditions of the title insurance that will be given to the buyer
· Detailed information about the property
· Information on debts or liens on the property
· Any limited use information for the property
These are all items that a buyer can try to have removed before continuing with the purchase. Some buyers may also walk away from the purchase if the title is not clean.
There are three parts of this report that are particularly important:
1. The legal description of the property
2. Any mortgage liens on the property
3. Any property taxes owed
In the legal description, you’ll be able to find out more about the zoning of the property, any boundaries that are set surrounding the property and other vital information. If the title is in conflict with anything the seller has told you, then it’s worth taking the time to ask for clarification. In some cases, the title will come back to show that the property cannot be sold, which saves you time and money by allowing you out of the sale.
How can you get a preliminary title report?
The preliminary title report is usually provided by a listing agent, but your attorney can also assist you in obtaining a preliminary or full title report at your request. Ask for a copy of the preliminary or full title report if you feel that you want to move forward with a purchase.