The sale, purchase, and financing of commercial real estate is more complicated than the purchase of a residential home. These sizeable investments warrant protection against claims regarding true ownership and control of the property or the real estate it sits on. Through consultation with a West Virginia commercial real estate attorney, you can understand all aspects of your commercial real estate deal—including the reasons for obtaining title insurance for commercial property.
Types of Title Insurance for Commercial Property in WV
WV Code § 33-1-10(f)(4) defines title insurance as a type of surety insurance that protects owners or others with an interest in property, such as lenders, against loss arising from defective title or adverse claims against title. There are two types of title insurance policies—an owner’s policy and a lender’s policy.
An owner’s title insurance policy lasts until the insured’s ownership of the property ends and protects the owner’s equity in the property. A lender’s title insurance policy protects the lender up to the amount of the loan provided to the purchaser on a mortgaged property. Unlike an owner’s policy, which retains its coverage value, a lender’s policy decreases in coverage amount as the underlying loan is paid down, and it ends entirely when the mortgage is paid in full.
Whether you’re a purchaser of commercial property or a lender for such a transaction, counsel from a WV commercial real estate lawyer is invaluable. Indeed, by law, real estate attorneys must be involved in the issuance of title insurance for commercial property. For example, WV Code §33-11A-11(c) requires the title insurance company to obtain a title opinion from an attorney licensed in West Virginia before a title insurance may be issued.
Protection against Hidden Defects in West Virginia Commercial Real Estate Transactions
The need for title insurance in commercial real estate transactions arises out of the pitfalls that can occur incident to purchasing real property.
The legal ownership or interested conveyed in a real estate transaction is first confirmed by a title search. An incomplete or flawed title search that was incomplete could later cause problems affecting the purchaser’s title or ownership interest in the property. Intentional conduct, such as fraud, could also create title defects. Hidden defects on a commercial real estate property can arise from situations such as these:
- Forgery or other fraud affecting deeds or other documents relating to the property;
- Wills purporting to transfer title to the property that were not properly probated or were signed by an incompetent testator;
- Inadequate surveys and/or erroneous descriptions of the property affecting deeds; or
- Outstanding claims against the property that were not recorded or did not otherwise show on the property record.
Title insurance indemnifies the policyholder against loss arising from these and similar title-related losses.
The Benefit of Title Searches and Title Insurance in West Virginia Commercial Real Estate Transactions
A title company conducts a title search before closing to ensure that there are no title defects or claims against the property that could arise. Following are examples of areas the title search covers:
- Determining whether all records related to the commercial real estate property at issue have been properly prepared and recorded and that any liens on the property have been satisfied;
- Confirming the chain of title to the property, from owner to owner for a determined period of time, usually 60 years;
- Confirming there are no errors, forgeries, or patent omissions in documents relating to the property that could affect the validity of title to be conveyed;
- Confirming there are no outstanding liens, assessments, or other financial claims, if any, against the property; and
- Identifying the existence and extent of any and all easements or other legal rights held by someone other than the seller that burden the property.
An experienced West Virginia real estate attorney can help you ensure that you have a thorough and accurate title search during your commercial real estate transaction, and that you obtain the title insurance that best protects you in the deal.
The Need for a West Virginia Commercial Property Lawyer
West Virginia commercial real estate transactions can be quite complicated, with many issues that can arise but are not readily apparent. With the guidance of a commercial real estate attorney, you are better protected as you proceed to closing in a commercial real estate transaction.
In commercial real estate transactions, you can trust Jenkins Fenstermaker, PLLC to properly advise you on title insurance for commercial property and other aspects of your transaction. Allison J. Farrell is a top Clarksburg, WV commercial real estate attorney with extensive experience with title insurance in commercial property deals serving buyers and lenders throughout the state. Call Allison today at (304) 521-6120 or fill out our easy contact form to schedule an appointment and receive the legal skill and attention needed to protect your investment.