Do You Really Need Commercial Title Insurance in North Carolina?

A man signing a piece of paper on a wooden desk.

As with any other investment, purchasing commercial real estate carries a certain number of risks. If you’re a highly experienced investor, you probably already know what to look out for when planning a new commercial property purchase. If you’re a new investor, you might need to do extra research before purchasing a new commercial property. Whether you’re a longtime real estate investor or just getting your feet wet, one surefire way to invest smartly is by ensuring you are properly protected.

Here are some questions you should be asking your real estate agent as you begin planning your next commercial property purchase.

How Would an Issue Arise with My Property’s Title?

A good title will make or break your commercial property. When you purchase a piece of commercial real estate, you’re likely investing a huge sum of money into a worthwhile financial investment. But what if it’s not worthwhile? 

Commercial title insurance will protect you in the event that there’s a problem with your property’s title. Those issues might include negligence, faulty recordings or paperwork, or even fraud.

How Does Title Insurance Work?

Unlike many other types of insurance, where you pay both a premium and a monthly fee, for title insurance you pay one lump sum premium based on the purchase price of your property. This policy protects you in case any issues arise with your title.

Oftentimes, when issues arise with your title, they are often extremely costly—and at times impossible—to resolve. That’s why it’s so important to get title insurance.

Here’s how it works: when you are beginning the transaction to purchase a piece of commercial real estate, you’ll work with your agent to obtain a title insurance policy from a local title insurance company. That company will work with a title agency to perform a title search. They will thoroughly investigate the history of the property’s title to ensure it is clean. If any issues arise with the title, it may signal that this is not a worthwhile investment. You can also work with the seller to resolve these issues before you buy.

How Do Real Estate Titles Differ From Other Types of Property?

A real estate title is much more complex than, say, the title for a car or a boat. The title to a real estate property is not determined by a single piece of paper. Real estate titles depend on an existing chain of different documents related to that title.

Finding out who owns a specific piece of property can be challenging, especially when it’s gone through many different owners. Taking out a title insurance policy includes researching its history, which lets you know if there are any issues you’d rather avoid with a particular property.

What Should I Keep in Mind While Shopping for Title Insurance?

When it comes to title insurance, it pays to do your research. While you certainly don’t need to hire an attorney to purchase title insurance, you should be aware that your agent and the title insurance company are not able to provide you with legal advice as you shop for a title insurance policy.

Typically, there are two kinds of title insurance: an owner’s policy and a lender’s policy. The owner’s policy protects the owner for the entire amount of time they have interest in the property. The lender’s policy protects the lender for the amount of time that the property is being paid off.

When it comes to taking out an owner’s title insurance policy, you should be sure that it includes the following:

  • Extended coverage
  • Taxes
  • Loss determination
  • Survey issues
  • Special/project use
  • Unusual loan documentation issues

For a full list, please contact us at Tryon Title Insurance to discuss your specific title insurance needs.

What Makes a Title Clean?

Generally, a real estate title is considered clean if it is free of fraudulent errors and does not have any existing liens or claims. Additionally, there should not be any confusion over ownership—as this can make purchasing the property very challenging.

Shopping around for commercial title insurance in North Carolina? Contact our team at Tryon Title a call. We have years of experience helping commercial real estate investors in North Carolina and we have everything you need for a successful commercial transaction.

Every Real Estate Investment Needs Title Insurance in NC. Here’s Why.

As a real estate investor, chances are you know a thing or two about title insurance in North Carolina. After all, with the large amount of money you just spent on your newest property, you want to do everything you can to protect yourself financially.

The interior of an apartment complex.

That’s why we highly recommend getting a separate title insurance policy for every single property you invest in. But it goes further than that; you can’t just use any old title insurance agency. In order to truly protect your investment, you have to make sure that your title insurance policy is clean, accurate, and effective.

The difference between a clean title insurance policy and a subpar one could spell disaster for your real estate investment.

There are Dozens of Reasons to Take Out a Title Insurance Policy

With real estate, you never know what’s going to happen. Even if you purchase a new construction home, there’s no way of knowing who used to own the land it’s built on without doing a title search.

There are dozens and dozens of potential issues that could arise with your property’s title! A few of the most common ones include:

  • Mistakes: incorrect information on the title in relation to previous owners, the address, and when or where it was sold.
  • Forgery: this is even harder to detect. A property owner may have been impersonated or had their signature forged on an important document.
  • Secret Spouses: During divorces, many couples won’t cooperate with each other when it comes to real estate. As a result, oftentimes one spouse will sell a property without telling the other—even if their name is on the title.
  • Zoning Violations: your commercial property may be improperly located.

Although title insurance may seem pricey up front, it is almost always worth the investment. Plus, the majority of the premium you pay up front goes towards the title search—and determining if the seller actually owns the property they’re trying to sell.

And There’s More Than One Type of Policy to Consider

You may have heard of the difference between a lender’s policy and an owner’s policy, but there are two other kinds of title insurance policies you should be aware of. We’re talking about standard coverage vs. extended coverage title insurance policy.

As you might have guessed, the standard coverage policy doesn’t offer quite as many protections as the extended coverage. It’s also less expensive. Typically, a standard coverage policy covers the following kinds of title issues:

  • Chain of title fraud
  • Liens
  • Property defects detected by a title search
  • Defective recordings

An extended coverage policy covers everything we just listed, as well as some additional issues that may arise with your property title. With extended coverage, you’ll also be protected from any issues that weren’t previously recorded or that were uncovered through inspection or verbal inquiries.

Rely on a Professional Title Insurance Agency to Protect Your Investment

No matter what kind of real estate property you’re investing in, protecting yourself and your investment should always be a top priority. If you’re looking for a clean and effective title insurance policy for your upcoming investment, please don’t hesitate to contact Tryon Title today.

The Closing Process and Title Insurance: Residential vs. Commercial Real Estate Transactions

A multi-story office building set against a blue sky backdrop.

Whether they’re residential or commercial focused, there’s one thing every real estate agent looks forward to: closing day. However, depending upon which segment of the industry they work in, there are a number of differences between exactly how to navigate closing day—and applying for title insurance.

In this blog, we’re going to cover some of the main differences between closing on a residential home and closing on a commercial property. Have any questions about your upcoming transaction, and whether or not you’ll need a commercial title insurance plan? Don’t hesitate to give us a call.

Now, let’s dive right in.

Operational Differences: Paperwork and Multiple Parties

One of the biggest differences between residential and commercial real estate closings is the technical side of the process. Purchasing a home to live in is relatively straightforward: it usually involves a buyer, a seller, and their respective real estate agents. The buyer applies for a mortgage loan through a bank, supplying all the necessary paperwork and information, and prepares a down payment for the seller. After the loan is approved, a professional agency will perform a title search for the property, and finalize the buyer’s title insurance policy.

While this is happening, a sales contract is written and approved by the seller and their agent. Once the down payment and the loan finish processing, the title of the home is transferred to the lender, the buyer pays all the closing costs and receives the keys to their new home.

Commercial transactions, on the other hand, are more complicated as they often require many different parties—not just a buyer and a seller. This can make the closing process more challenging, as everything must be approved by every stakeholder.

Logistical Differences: Tenants

Similarly, commercial properties are often multi-family properties—meaning you may also be taking on tenants.

In order to transfer ownership of a commercial property that serves as an apartment complex, the buyer will have to assume any residential leases held by the tenants. If this is the case, additional paperwork for and from the tenants may also be required.

Legal Differences: Laws that Regulate Real Estate Closings

There are a number of laws that regulate exactly how a real estate closing process happens—and how much it costs. Oftentimes, commercial real estate closings are less regulated than residential properties. As a result, these closings may be more complex because they are not as closely monitored by the law. Due to their price differences and complexities, they often require more expensive closing costs as well.

This is just one example. In order to understand the many complexities involved with the closing process and the law, you’ll want to talk to your real estate agent or a professional title insurance agency.

Title Insurance Made Easier

Buying a commercial or residential property? Tryon Title Insurance is here to help. We’re a highly qualified title insurance agency with experience in every one of North Carolina’s 100 counties. Our underwriters are well-versed in both residential and commercial transactions.

If you’re looking for a title search, rely on Tryon Title for excellence.