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Why conduct a title search before investing in a commercial property?

On Behalf of | Jun 16, 2023 | Commercial Real Estate |

When investing in a commercial property, there are things you should do to ensure you are making the right investment. One of the things you should do is to conduct a title search. This process entails recovering documents that show the history of the commercial property you want to buy. 

A title search is often done to pave the way for title insurance. However, there are other benefits of conducting a title search before investing in a commercial property. Below are some you should know:

Helps discover property liens

A lien is a legal claim against a property that can be used as security to repay a debt. For example, liens can allow the holder to access a commercial property if there is an outstanding debt. This can include unpaid taxes. 

Reveals any mechanics liens

If any unpaid renovations were done to the building, a title search would reveal this information. In addition, the search will outline whether there are liens against the property and the individual they are owed to.

Outlines encroachments

Encroachments can make it hard to define property lines and create title concerns when you want to sell the property. Additionally, encroachments can create liability issues and compromise your relationship with other property owners. 

Reveals deed restrictions

Deed restrictions on commercial properties are like zoning ordinances because they limit the type of business that can be practiced on the property. This is usually done to maintain some form of uniformity and protect the value of the property or the interests of neighboring businesses. So, if you are thinking of investing in a commercial property, you should consider reviewing any deed restrictions that might limit property use. 

Conducting a title search is important before investing in a commercial property. A comprehensive title search will provide you with peace of mind and minimize potential risks.