The importance of commercial title insurance in the current climate
Aug 25th, 2020 | By FCT
Commercial property owners are facing great challenges right now. Since the start of the pandemic and the government-mandated lockdown, they’ve had to come up with new and innovative solutions to continue operating their businesses. The one thing that has remained constant even amid the new reality is the value and importance of a title insurance policy and the protection that it offers.
Many owners are currently dealing with mortgage restructuring and Debtor-in-Possession (DIP) financing. Imagine having to deal with a lien, a defect, or an encumbrance on your title while also in the middle of a global pandemic. Now imagine it costing you $97,343.84.
That’s what happened to John Smith.
Protection against liens and encroachments
John discovered that the parking spaces (13 in all) and garbage pad his commercial property was using were not on his land but used by the previous owner under a “Permission to Use” provision. Since the disputed spaces also provided access to the main road, this posed a significant problem.
John initially purchased the land with the intent to convert some of the now disputed spaces into apartments. As you can imagine, finding out that he didn’t actually own the spaces halted all of his plans. To add another layer of difficulty, the landowner of the disputed section, insisted that John purchase the space for $97,343.84 if he wanted to continue using it, rather than just extending the “Permission to Use”.
Luckily for John, he had a title insurance policy with FCT.
At FCT, we’re invested in helping our customers succeed. Our commercial title insurance policy has helped to protect many property owners from having to pay large, unforeseen out-of-pocket expenses. Just as it did for John.
Once John’s claim was approved, we stepped in and paid the amount needed for him to purchase the land so that he could continue with his apartment building project free from worry.
It’s not always possible to plan ahead for every contingency. But with a commercial title insurance policy, you can mitigate many unforeseen risks and get peace of mind at a time when there is great uncertainty.
Want to learn more?
Check out our webinar page to find out all about the value of title insurance in commercial real estate.
*The name of the individual mentioned has been changed to protect his privacy.