An Explanation of North Carolina Commercial Title Insurance

A shot of three commercial buildings.

Commercial real estate is a complex investment choice with a lot of different aspects to consider. Unlike residential real estate, it typically comes at a much higher price tag and a confusing negotiation process. As such, it’s important to protect your investment as much as possible—to the full amount of money its worth—with a thorough and effective commercial title insurance policy.

Commercial title insurance in North Carolina is straightforward: it protects the investment for the investor for the full amount of money paid for the property. As a commercial real estate investor, you need commercial title insurance.

Here’s why.

What Does Commercial Title Insurance Do?

Commercial title insurance protects the investor in the event that any issues arise with the property’s title. When you take on an investment, there’s always an inherent level of risk. For real estate, it is always possible that an issue may come up with the property’s title.

The type of issue generally varies, but it may include negligence, a clerical error, or fraud. When this happens, without a title insurance policy protecting them, the property investor may end up losing the property they paid for without any financial reimbursement. In addition, they would be responsible for covering any court or legal fees necessary to address the issue in a court of law.

That’s why commercial title insurance is so important: it protects you financially as you make a huge property investment.

What Kinds of Property Require Title Insurance?

While title insurance is used in all types of real estate transactions, it is especially valuable for commercial real estate as the purchase price is usually much higher and the purchase agreement more complex.

Commercial real estate agreements are extremely nuanced, so it’s important to ensure that your commercial title insurance policy covers you completely in the event that anything happens.

Who Pays for Title Insurance?

In North Carolina there are two types of commercial title insurance: the lender’s policy and the owner’s policy. A lender’s policy protects the lender from financial repercussions in the event that something happens with the title. An owner’s policy does the same, but for the owner or investor of the property.

If the buyer is using a lender, they are responsible for buying both the lender’s policy and the owner’s policy. The lender’s policy will stay in effect for the amount of time that the loan is being paid back. The owner’s policy lasts for as long as the person owns the property or has a financial stake in it.

It’s important to note that the lender’s policy only protects the lender. We highly recommend the buyer also take out an owner’s policy to protect their own financial situation.

What Does the Title Insurance Process Look Like?

Every title insurance policy varies slightly depending on the type of commercial property being purchased, as well as its title history. The first step to obtaining title insurance is contacting a reputable North Carolina title insurance agency. The agency will then conduct a title search to investigate the history of the property and its different owners.

They will closely examine all of the recorded title transfers for the property and look into any liens, encumbrances, and easements taken out against the property. This search is very thorough, and the agency will take every possible measure to ensure the title is clean.

Once the title search is complete, the agency will provide a report with its findings to the buyer as a preliminary report, who then has the chance to review it with the seller and their lender before purchasing the property.

What Does the Preliminary Report Include?

The preliminary report is one of the most important parts of the title insurance process. This report contains all of the findings from the title search, including any liens or other encumbrances that have been taken out against the property. It clearly defines the state of the property’s current title in relation to the seller.

Once the report has been issued, the seller has the opportunity to review it and make any challenges. For example, if the report reveals that the seller does not have a clear title to the property, the seller may then launch their own investigation to uncover any additional details.

Additionally, the buyer must carefully review the report to ensure there are no outstanding issues with the title. This is very important because the title insurance policy will be based on the findings of this report.

How Do You Obtain Title Insurance in North Carolina?

The first step to taking out a title insurance policy is finding a reputable agency with experience helping real estate investors and buyers in North Carolina. Here at Tryon Title, we have over 30 years of combined experience assisting buyers with their real estate transactions.

Due to the nature of commercial real estate, choosing the right agency to help you is of the utmost importance. Our team is committed to offering the best possible experience, respecting attorney and paralegal deadlines by providing fast and accurate service. Give us a call today to get started.

The Impact of Coronavirus on North Carolina Real Estate

An aerial view of three rows of suburban homes.

As we begin to shift into a new “normal,” the real estate industry is adjusting to life in the midst of the COVID-19 pandemic. Social distancing and stay-at-home orders have caused businesses to change their operations to ensure safety and healthy practices. The North Carolina real estate industry has followed suit.

While things are changing, there’s no need to panic. This is a resilient industry that’s gone through many recessions and always manages to come out on top. Here are some answers to the questions we’re hearing most often from our real estate clients:

How Do You Sell Homes in a Pandemic?

In an age of social distancing, virtual tours are the new norm for real estate agents. Many agents across the state are finding new and creative ways to show potential home buyers their listings without any travel necessary.

Just getting started? Here are a few tips for pulling off a great virtual tour:

  • Get the home ready like you would for any other show: open all the windows, turn on all the lights, and make the home look as bright and aesthetically pleasing as possible.
  • Try not to zoom in at any point because this distorts the view and creates confusion for the viewer. Similarly, if you’re going to show off the entire house, be sure you’re far enough away from it so that you capture the entire home in the frame.
  • Make sure to choose the right time of day. While noon has the most sunlight, it can wash out the home’s features. Shoot the virtual tour at sundown, as this has the most flattering light.

In addition to the traditional virtual tour walkthrough, consider trying out a 3D or virtual reality tour. These give the buyer the freedom to click through the home and navigate it at their own pace—as if they were there in person.

Are Home Prices Changing?

Recent data shows that home prices are going down as sellers begin to lose confidence in the real estate market. In early April, the median listing price for a home in the United States was $309,000—nearly $21,000 lower than two weeks before.

Are Sellers Delisting Their Homes?

Some sellers have opted to delist their homes because of the coronavirus. In the last week of March, there was a 184% year-over-year increase in delistings—a total of 28,140 homes across the country.

Is Now a Bad Time to Buy a Home?

No, while supply may be temporarily down, that doesn’t necessarily make it a bad time to buy a home. It’s difficult to time the market when it comes to any serious investment—including real estate—which is why most experts say you shouldn’t.

The truth of the matter is: people still need to buy homes. There are a wide variety of reasons to buy a home, and those reasons won’t go away just because there’s a pandemic. Buyers can still find their dream home, at the right price and in the right location, at the time. The main thing that’s going to change is the process of getting it done.

What’s Going on with Mortgage Loans?

According to the Mortgage Bankers Association’s seasonally adjusted index, mortgage applications dropped 33% year over year. While North Carolina has not been hit as hard by the coronavirus as other states, mortgage applications are expected to decrease in volume as interest rates creep upwards.

In fact, the average contract interest rate for a 30-year fixed rate mortgage rose in March from 3.84 to 3.87. It may become more difficult to obtain a new home loan across the country. Many lenders are adding stricter underwriting to their loans and some refinance applications are being dropped as applicants lose employment or income.

In addition, it was revealed in the Mortgage Bankers Association survey that 7% of existing mortgage loans are now in forbearance. Many banks and lenders are offering homeowners different relief programs related to the COVID-19 pandemic.

How is the Mortgage Process Changing?

Some lenders are beginning to require higher credit scores for mortgage applicants. Additionally, minimum down payments are increasing and a few lenders are stopping the issuance of loans altogether.

That just means buyers need to be more diligent in shopping around for different lenders and getting pre-approved for a mortgage application before looking for a home.

How Can I Stay On Top of What’s Going On?

With rules and regulations seeming to change every day, it can be challenging to stay on top of everything that’s happening in the real estate industry right now. Some easy ways to stay updated, while avoiding the “information overload” that some are experiencing, is to subscribe to local blogs like ours. NC Realtors has a Coronavirus Information page that they update regularly with resources, guides, and other information useful to anyone involved in the real estate industry.

Have a specific question about your title insurance at this time? Don’t hesitate to reach out to Tryon Title. We’re here to help you and your clients as you navigate buying, selling, and investing in North Carolina real estate during coronavirus.

Coronavirus and the North Carolina Real Estate Market: What You Need to Know

A sleek, modern living room.

COVID-19, the disease caused by coronavirus, continues to affect our economy and the North Carolina real estate industry in unprecedented ways. That doesn’t mean it’s time for panic! Instead, find ways to remain level headed and begin planning for how you can alter your business operations to encourage safety and healthy practices.

Contrary to what any scary, click-bait articles you’ve probably seen online might say, the real estate market is not shutting down. It’s merely adjusting to new rules and recommendations set forth by the CDC.

Need title insurance fast? Check out our Tryon Express service. Please know that all of us at Tryon Title are here for you as you work to assist your clients in buying, selling, and investing in North Carolina real estate during this time of change.

Here’s what you need to know:

How is Coronavirus Affecting the Economy?

Economists agree that we’re likely headed towards a recession. It’s important to remain calm at this time: the real estate industry has seen many recessions before, and always manages to adjust, shift operations, and come out on top.

Are Mortgage Rates Going Down Because of Coronavirus?

In early March, the Federal Reserve cut mortgage interest rates by half a percentage point. Since then, rates have fluctuated but have actually risen slightly overall thanks to a massive influx in refinancing requests by current homeowners.

At their lowest point during the week of March 5, 2020, the average mortgage interest rate was 3.29%. Currently, the average interest rate for a 30-year fixed-rate mortgage is 3.36%. Interest on a 15-year fixed-rate mortgage sits at about 2.77%.

According to Joel Kan of the Mortgage Bankers Association, rates will likely stabilize soon and remain low. This is ideal for home buyers with cash reserves looking to purchase a home soon.

How Will NC Real Estate Change as a Result of Coronavirus?

The North Carolina spring home-buying season will almost certainly be less busy than usual. But that doesn’t mean sales won’t happen! Many buyers are still prepared to purchase a home in North Carolina this spring—though they are taking extra precautions to stay safe while doing so. Plus, with mortgage rates at a near all-time low, buyers have an extra incentive to buy a home now.

The fact of the matter is this: a home is an essential need. People will still need to buy homes even in the midst of a pandemic. That won’t change. What will change is the way the home is bought—and that’s where real estate agents and other industry professionals can step in to help their clients make smarter moves.

How Can Real Estate Professionals Adjust Their Practices for Coronavirus?

Here are some tips and ideas for how to sell homes at present:

  • Encourage virtual showings whenever possible
    • Real estate agents across the country have begun hosting Facebook or Instagram live tours of their active properties.
  • Opt for private showings instead of open houses
    • Before the showing, open every door and window of the property so the buyer won’t be required to touch anything. When they arrive, offer protective booties or slips for their shoes, and make sure a hand-washing station, or at least some hand sanitizer, is available.
  • Be mindful of what you (and your clients) touch
      • Avoid shaking hands
      • Ask buyers to refrain from touching any doorknobs or kitchen appliances.

Will the Closing Procedure Change?

Closings will need to be optimized to eliminate any touching and speed up the process as much as possible.

The faster a real estate transaction is completed, the less likely germs are to spread from person to person. In a world where social distancing is the new norm, closing real estate transactions will be a little trickier—but not impossible.

Tryon Title Is Here for You

These are unprecedented times, and professionals across every industry are living day by day. As such, Tryon Title is committed to providing excellent title insurance services in a quick and timely manner. For fast title insurance, rely on our Tryon Express. You can easily request title insurance online, and we’ll deliver your policy in record time.

Have a question about the real estate industry or title insurance? Please don’t hesitate to contact us. On behalf of our entire staff at Tryon Title, we’re here for you.