The Role of Title Insurance in Commercial Real Estate Transactions

by Gregg County Title Gregg County Title

Title insurance such as Escrow Agent Texas are some of the major pieces of any commercial real estate transaction. In its absence, both buyers and sellers would find the risk of buying and selling property to be too high.

What does title insurance protect against?

Title is the right to ownership of a parcel of real estate. Deeds convey title between buyers and sellers. But, not all deeds convey full ownership of the property and real estate can be subject to liens or other encumbrances that limit the rights of ownership.

A buyer in real estate transaction is buying insurance that the title to the property they are seeking to acquire is just as the seller promised it is. If a seller was supposed to convey full and clean title to a buyer, but later a third party claimed that they actually had the rights to the property and not the seller, the title insurance will protect the buyer.

Every policy is slightly different, but usually, the title insurance will cover the legal fees over the title fight. In the event that the third party prevails and is awarded the property the buyer paid for, the title insurance offers reimbursement to the buyer.

Different Types of Policies and Endorsement

Title insurance and settlement services typically offer two different types of policies. There are loan policies and owner’s policies. Loan title insurance policies are meant to protect the investment of the bank or other lender should any problem with the title later arise.

An owner’s title insurance policy is designed to protect the buyer or owner of the property from the future discovery of problems with the title to the property.

Title insurance company Texas also offer a variety of endorsement for title insurance policies that protect against more than just title issues. These endorsements may cover things such as boundary mistakes, zoning conflicts, and environmental issues. The cost of the endorsements varies depending on the risk factors and the value of the property.

How is title insurance used in commercial real estate?

Title insurance in residential real estate is sometimes seen as a formality, however, title insurance is major part of both the due diligence phase and the closing process in commercial real estate deals. Since the stakes are high in commercial real estate, all the parties from the seller, and the buyer to the lender have a vested interest in ensuring that the title insurance goes smoothly.

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Created on Feb 7th 2020 00:43. Viewed 236 times.


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