Question:

What is a commercial real estate title insurance policy?

Answer:

A commercial real estate title insurance policy is simply title insurance coverage on commercial property. Title policies are of two main types - owner and lender's title insurance.

  • The lender's title policy is required every time a purchase or refinance real estate transaction is completed.
  • The owner's title policy is not required but recommended for the buyer to purchase; title insurance coverage on commercial real estate may be pretty costly and it is recommended that you use real estate attorney's advice to calculate the risks and the optimal price/coverage ratio.

Some Facts about US Residential and Commercial Real Estate Title Insuring

The title industry is huge in the U.S. with over 105 title insurers and more than $10Billion yearly profit. The title insurance industry streams of income are generated through sale or mortgage refinance on residential and commercial properties.

Certain commercial real estate title insurance policies can be very large, but on the whole commercial title insuring only stands for no more than 25% of the overall accumulated title industry revenue. The residential market seems to generate the rest.

Title companies either maintain their own databases with accumulated title records, or have access to public databases. Title search and policy costs are lower when a previous title search or coverage exists in the recent past (5 years or less) for the specific property.

Title insurance for commercial buildings or home residences is often purchased by the lender only.

Although owner's title coverage is recommended in general in many cases to avoid title issues arising from past and hidden title defects, title insurers generate most of their income from selling lender's title policies.

Important: To be protected from title issues arising from events occurred after signing the title policy, one has to purchase extended title policy coverage for residential and commercial real estate.

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