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Commercial Real Estate Transactions

The purpose of title insurance in commercial real estate transactions is not much different than in residential purchases. It is meant to protect the buyer and their mortgage lender from losing money as a result of previously unknown issues with the property title.

Commercial real estate is much more expensive than single-family homes, condos, and other residential buildings in Tennessee. Therefore the financial stakes are much higher for both buyers and lenders. An unpaid lien or an unresolved ownership claim on an office building or a shopping center worth several million dollars can end up costing hundreds of thousands of dollars in mitigation costs.

In addition, commercial properties tend to change ownership more often than residential real estate. The more times a property changes hands, the more chances for title issues to occur. For instance, ownership of commercial properties is a lot more complicated. Oftentimes, the owner is an LLC that is owned by other LLCs, a corporation, or several individuals. Unresolved ownership claims are much easier to arise when there are multiple levels of ownership.

Commercial buildings also require much more stringent property management than residential properties. Issues such as roof repairs, janitorial and landscaping services, and space buildouts are just a few examples of standard maintenance at a typical office or warehouse building. If left unpaid, such expenses can result in future liens against the property and an unsuspecting new owner.

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