Title issues sometimes arise during real estate transactions, threatening or delaying the transaction and carrying financial consequences for buyers and sellers alike. We can help you with any title issue in a commercial property transaction, no matter how large the problem.
Some of the most common title issues in commercial property transactions include undisclosed contractor liens from previous renovations, boundary disputes with neighboring properties, gaps in the chain of title, easement and access disputes, and restrictive covenants that limit property use. Title issues must be addressed before commercial real estate transactions are finalized, so buyers do not face costly consequences after purchase.
For help with your case from the Heyman Law Firm, call our Baltimore real estate transaction and disputes attorneys at (410) 305-9287.
What Are the Most Common Title Issues in Commercial Property Transactions?
Title issues are relatively common in commercial property transactions and among the top reasons many real estate transactions fail. Title issues are any problems that raise questions about property ownership in one way or another.
Undisclosed Liens
If there are sizable, high-value liens on a commercial property that were previously undisclosed, that presents an issue during the real estate transaction. Liens are any unpaid bills on a property, such as expensive repair or maintenance work. The debt is attached to the property, not the owner. Buyers can inherit liens, meaning purchasing a property with many undisclosed liens could have major financial consequences.
Some sellers do not disclose liens in the hope that buyers will not discover them until after a transaction is complete. Our attorneys can prevent this from happening to you by doing our due diligence throughout the transaction.
Boundary Disputes
Boundary and survey disputes are also among the most common title issues that arise in commercial property transactions. Disagreements over where one property ends and another begins should be resolved before a real estate transaction is finalized so that the buyer does not have to deal with encroachment or other boundary issues after the sale.
Chain-of-Title Gaps or Errors
Chain-of-title discrepancies can also cause delays and issues in commercial real estate transactions. There should be a documented history of ownership for the property you are purchasing or selling, and gaps in ownership and documentation can lead to major financing issues and might ruin deals altogether. Chain-of-title errors and gaps prevent properties from being sold until they are addressed, as the owner is unconfirmed.
Easement and Access Issues
Easements on a property could affect how the buyer plans to use it in the future, so any easement or access issues or concerns must be addressed before the sale goes through.
Restrictive Covenants
Restrictive covenants limit what you can and cannot do with a particular piece of property. Restrictive covenants can limit building heights, styles, and commercial purposes. If a restrictive covenant attached to the property would impede you after purchasing, it must be addressed before closing if possible.
How Can Title Issues Affect Commercial Property Transactions?
Title issues can affect buyers and sellers in commercial property transactions by slowing or complicating transactions and creating additional financial hurdles.
Delayed Closing
If title issues must be addressed before you can finalize a commercial real estate transaction, they might delay the closing date for the transaction. Even if you are anxious to close, you shouldn’t ignore glaring title issues before you finalize the deal. Closing deals without addressing title issues can be risky and lead to consequences almost immediately.
You cannot close on a property if certain title issues are present, such as chain-of-title gaps.
Loss of Financing
There can be serious financial consequences when title issues arise during commercial property transactions. For example, buyers facing title issues with commercial properties may face a financing freeze or lose financing altogether. Buyers who close deals without addressing title issues may face immediate financial hardship after becoming responsible for undisclosed liens tied to contractor debts on the property.
Deal Failure
If title issues cannot be resolved during a commercial property transaction, the deal might fall through. If the deal fails because of title issues that the seller should have disclosed before you made your down payment, you may be able to recoup any earnest money that was being kept in an escrow account.
Protect yourself in the event of a commercial property transaction failure by having our lawyers include specific contingencies in the purchase agreement you and the other party sign once your offer is accepted.
How Can You Solve Title Issues During Commercial Property Transactions?
Solving title issues before you close on a commercial property is a must, and our lawyers can help you reach a favorable resolution.
Address Liens in the Contract
If our attorneys discover undisclosed liens on a commercial property you wish to purchase, we can stipulate in the purchasing agreement that the debt must be paid in full before closing. If the seller does not pay off the lien as agreed, the buyer can walk away from the transaction without losing any of the money they contributed toward the down payment.
Get a Land Survey
Getting a land survey can resolve many different boundary, easement, and access discrepancies and conflicts. You can get an American Land Title Association and the National Society of Professional Surveyors (ALTA/NSPS) survey completed that shows all property lines, building and road locations, utility lines, easements, and encroachments.
Not only can getting a land survey resolve title issues you are experiencing during a real estate transaction, but it can also help you secure the title insurance you need.
Secure Title Insurance
Title insurance can help protect the commercial property you buy from other ownership claims or liens that were put on the property before you assumed ownership.
Get Our Help with Title Issues in Commercial Property Transactions
Get help with your case from our Bowie, MD real estate transaction and disputes attorneys by calling the Heyman Law Firm (410) 305-9287.