Although the commercial property you just purchased is new to you, it has a history, and sometimes, these histories can include unwanted baggage. During a real estate transaction’s closing process, a title search on the property is completed to determine whether there are title defects that can have an effect on the purchase. One common title issue buyers face when completing a title search is an error in public records. Humans aren’t error-free, and a clerical or filing error regarding your commercial property can have an effect on the deed and result in costs you may not have expected.
A title search is performed in order to determine if your property’s title is clear, as well as to find any mistakes that could have been made in public records. An example of an error that could be filed in public records is a description of the property that may appear to be accurate but isn’t, such as an incorrect statement of the square footage of the property or missing reservations, covenants and restrictions. If the actual legal characteristics of the property are different than what is listed on the documents, commercial buyers may run into issues with their neighboring property owners, the legal requirements associated with the use of the property, and many other problems.
Improperly filed legal documents or mortgage releases mishandled by public records can also result in additional headaches for the buyers until these issues are resolved.
Completely avoiding errors in public records is nearly impossible because buyers of commercial property have no control over a property’s past or a mistake that could have been made by those filing and recording these documents. And not all errors can be detected prior to closing. However, an Owner’s Policy of title insurance will help protect your ownership rights from errors and defects found in public records. This insurance may cover both the legal costs to defend your interests as well as certain losses sustained as a result of a covered title defect.