How to Ensure a Clear Title for Your Commercial Property

Buying a commercial property involves a significant commitment of both time and financial resources. It is not a decision that should be taken lightly. One important step in the process is conducting a property title...

How to do a Property Title Search for Your Commercial Property

Buying a commercial property involves a significant commitment of both time and financial resources. It is not a decision that should be taken lightly. One important step in the process is conducting a property title search to ensure that the title is clear and free from any encumbrances or legal issues. In this article, we will discuss the essential steps involved in conducting a thorough property title search for your commercial property.

Understanding a Title Search

Before we delve into the process, let's first understand what a title search entails. Essentially, a title search is an examination of public records to establish and confirm a property's legal ownership and uncover any existing claims, liens, or restrictions. It provides valuable insights for prospective buyers, allowing them to make informed decisions about their investment.

Identifying the Property and Locating the Deeds

The initial step in conducting a title search is to accurately identify the property and its street address. Once you have this information, the next crucial step is to locate the tax assessor's office in the county or city where the property is located. Most tax assessor's offices can be found online, which makes the process more convenient.

Checking the Tax Assessor's Records

After identifying the local tax assessor's office, visit their website or contact the office to access the property tax records. This information will be instrumental in your search for the property deed.

Searching for the Property Deed Online

In today's digital age, many states offer online access to property deeds. Some provide this service for free, while others charge a nominal fee. Start by locating the most recent deed and ensure that the name of the property owner matches that of the prospective seller. Additionally, gather all available deeds from the past 50 to 70 years to establish the chain of title.

Visiting the Office That Records Deeds

If the area where the property is located does not have an online deed search system, you'll have to manually search for the deeds and obtain the records. These records contain valuable historical information about the property, including its tax history. Each deed you find will lead you to previous deeds, helping you establish a comprehensive chain of title.

Creating a Chain of Title

Once you have collected copies of all the deeds, arrange them in chronological order, starting from the most recent one. This will help you determine if the property's ownership has been transferred properly. The chain of title will end once you ascertain the original owner of the property. Any information predating this may need to be obtained from courthouse records. If you encounter any inconsistencies in the chain of title, it is advisable to consult a real estate attorney to assess the risks involved in purchasing the property.

Checking for Financial Restrictions or Liabilities

The next crucial step in the title search process is to ensure that the property is free from any financial restrictions or liabilities that may affect your investment.

Conducting Tax Research

The tax assessor's records can also provide information on outstanding taxes or special assessments associated with the property. Unpaid taxes can create a lien against the property, which you need to be aware of.

Verifying Judgment Liens

It is essential to check if there are any judgment liens against the property. A judgment lien means that the court has granted a creditor the right to possess the property if the owner fails to fulfill their obligations.

Consulting a Real Estate Attorney

If you discover any financial restrictions or liabilities during your title search, it is highly recommended to consult a real estate attorney. They can help you navigate the legal implications and minimize the risks associated with purchasing the property. A skilled attorney can also hold the seller accountable for any damages resulting from their negligence.

Hiring a Title Search Company

Conducting a title search can be a complex and time-consuming process. To streamline and secure your investment, it is often wise to hire the services of a title search company.

Choosing the Right Company

When selecting a title search company, consider factors such as their industry experience, affordability, and your comfort level working with them. A reputable company will ensure a thorough search and provide valuable insights.

Understanding Title Insurance

While some may perceive it as an unnecessary cost, purchasing title insurance is highly recommended. Title insurance protects buyers against claims of ownership by other parties, flawed records, judgments against the property, and more. In commercial real estate transactions, especially those involving lenders, title insurance is often a requirement.

The Importance of a Clear Title

A clear title is crucial for several reasons. It guarantees that no other party has a legal claim to the property, reducing the risk of fraud. Additionally, it ensures that there are no outstanding liens or judgments against the property. These factors are essential in making an informed and sound financial decision when purchasing commercial property.

In conclusion, conducting a property title search is an essential step in the commercial real estate purchasing process. By following the steps outlined in this article and seeking professional assistance when needed, you can ensure the legality and financial viability of your investment. Remember, a clear title is the foundation for a successful and secure commercial property transaction.

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