Thinking of selling your commercial property without a survey and title work? You may want to reconsider. Many of my commercial real estate deals in 2016, ended up having an unforeseen issue related to the title or the results of the survey of the property. Many of these issues could be resolved at the time of listing the property, rather than after a deal has been put together. By having these essential steps complete prior to listing the property, a whole lot of time and energy could be saved - not to mention alleviate potential headaches for both buyers and sellers.
So, what is involved in obtaining title work on a commercial property?
It starts by working with a reputable title insurance company. Our brokerage has been fortunate to work with a variety of very good title insurance professionals over the years, and certainly would be happy to recommend a few. By requesting a title commitment before, or at the very least, at the time of listing, issues like liens, covenants, easements, restrictions, and more, can be identified and rectified as required. Examples of title reporting may include: Errors in the recording process; or paid-in-full mortgages may appear as a lien on the property awaiting a recorded satisfaction. It is not uncommon for individuals who came into ownership (e.g. estate) may not know "what" they are selling, and therefore may not be aware of many of the possible issues on the property - a title report can help to shed some light. As of the writing of this post, ordering title work from a commercial title insurance company can run $600.00-$750.00. This is one step that can significantly aid in streamlining the sale of a property.
Obtaining a survey is similar in terms of working with a reputable provider.
By obtaining a survey -- and ideally on a commercial property, an ALTA (American Land Title Association) survey -- you will better understand the parcel being sold. In the past few years of our commercial real estate deals, a survey has been able to catch an encroachment of a fence on an adjacent property onto the property being sold. Another example is of a property that was eventually held by a bankruptcy trustee and multiple areas of encroachment were found upon a full survey being conducted. As of the writing of this post, an ALTA survey will typically run between $3,000 and $4,000, and take several weeks to complete.
Our team hears comments all the time including: "I have always owned this property, I really don't need to obtain title work," or, "An ALTA survey is really expensive, can't I just get a boundary survey?", or similar comments. Unfortunately, we see what happens when these essential reports are not completed and investigated in advance. At a minimum, when issues are identified, they add time to the deal, or worse still, deals can fall apart altogether.
By taking a proactive approach, much time can be saved down the road, and your goal of selling your property will come to fruition. Talk to our team about questions you have while considering your "to do" list to list your property or when you are thinking about how to sell commercial real estate. We are happy to help wherever we can.
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