Title Companies | Purchasing Commercial Property
Title companies ensure that your real estate transaction is legitimate and uncontestable, whether you’re buying a residential property or a commercial property. But how do these two types of real estate differ, and how does this affect the title services and insurance for each?
What are Title Services?
Let’s start at the beginning. The title is the legal document that confirms the right to ownership of a property. Title companies, then, provide services that make this transaction easier, and protect you from any potential hazards when obtaining a title. Title services can include a title search (researching, examining and confirming the legality of the title before you begin any real estate dealings), preparing documents, managing an escrow account, organizing financing, and providing title insurance.
What makes Commercial Property Different from Residential Property?
In simple terms, residential real estate is property for individuals to use as housing, whereas commercial properties are used for business purposes. While title services for both of these types of real estate are similar, there are some significant differences:
- Residential properties are usually owned by one person, while commercial properties are often owned by a corporate body. This can complicate title searches and title transactions, as you are dealing with a number of different people who could all be involved in the sale and transfer of the title. Commercial title transactions need to be managed carefully and thoroughly in order to avoid costly mistakes.
- Furthermore, the commercial space may be owned by a subsidiary of a larger company, or the company may operate under a different trade name or corporate name. Your real estate lawyer or broker needs to be aware of these differences in commercial ownership, and be able to do a thorough title search that accounts for these differences.
- You may also be purchasing the commercial property with a business partner, in the name of a corporation, partnership or limited liability company in which case you need to understand the legality and consequences of such ownership. A good real estate lawyer should be able to help you and your co-participants understand your rights as individuals and as co-owners.
- The size and purpose of the commercial property are also important to consider. The title for a small, neighborhood corner store is going to be different to that of a big office block down-town. This is why it’s important to hire a title company that has the knowledge and experience to deal with the particular kind of commercial property you want to buy.
- Depending on the type of commercial property, the purchase agreement may contain extra details and clauses you don’t normally find in a residential title. For example, there may be strict regulations regarding the zoning or refurbishing of the property – is it in an historical area that prohibits certain renovations? Or say you are purchasing a property that used to be a restaurant – are the necessary business equipment and assets included in the sale? Are there any tenants on the property, and will you be taking over their leases? It’s these critical details that make commercial real estate title services more complex and in-depth.
When purchasing a commercial property, invest in a professional title company to ensure that your transaction runs smoothly. Contact Florida Home Title Company for more information or advice.