Most, if not all, professionals understand how valuable a title company can be during the home purchase process. Not only can a buyer purchase title insurance that protects their ownership of the property, but a title company like Cornerstone also offers early due diligence on properties.

Commercial transactions and properties are very different from residential transactions and properties. Those differences make a good, experienced title company even more critical for commercial buyers. Even a transaction as simple as refinancing can go smoothly or not, depending on the title company.

Differences in Commercial Transactions

There are four types of commercial transactions, three of them quite common: existing sites or structures that the buyer plans to maintain, buildings and sites that the buyer plans to develop, and refinancings.

The fourth is a newer type of transaction: buying office property for conversion to residential use. Such transactions may require more due diligence about existing and proposed zoning.

Typically, buyers of existing assets with no plans for significant alterations face a simpler transaction. The title company must ascertain that the seller has a valid title and can sell the property. The title company will also search for liens or other encumbrances on the title to ensure nothing will delay the sale. In addition, the title company should look for restrictions on the property, such as historic designations that might affect activities like changing the façade.

A site or property that the buyer plans to develop is a much more complex transaction. A development site is a “living organism,” one that evolves and changes to become something new.

Due diligence for such sites goes much deeper. Do restrictions beyond zoning or covenants limit development potential? In some areas, Cornerstone has found restrictions and agreements buried in centuries-old documents, such as subway rights of way, that must be resolved. In places like New York, where development and ownership of a property can date back hundreds of years, due diligence may mean multiple visits to courthouses and other sites to comb through historic documents.

Refinancing is more than just rubber-stamping some new paperwork. Covenants or restrictions on the property may have been altered—or missed during the initial purchase. The character of the property or its zoning may have changed. Development plans for nearby lots may affect the use or value of the property. Due diligence is just as important for refinancing as it is for a new purchase.

Benefits of Working with Title Specialists

Title companies that primarily handle residential transactions may lack the expertise that commercial transactions require. Before choosing a title company, ask these questions:

  • How much experience do you have with clients like me and these types of transactions?
  • Do you have legal counsel on staff with expertise in similar transactions in this geographic area?
  • What steps does your in-house team take to ensure a smooth transaction?

That level of expertise is particularly critical for commercial real estate investors.

Keep in mind that, just as with residential buyers, commercial customers have the legal right to choose the title company. Lenders or real estate agents/brokers may suggest or recommend a title company, but the ultimate decision rests with the clients.

The Cornerstone Value-Add

Cornerstone brings four important benefits for commercial buyers/investors to the table:

  • The deep experience gained from thousands of successful transactions
  • In-house expertise in commercial purchases, including legal counsel
  • Thorough due diligence to uncover and mitigate potential risks, from historic restrictions to potential issues caused by neighboring parcels
  • The ability to manage the entire transaction from site selection to closing, providing advice and guidance throughout

With the experience gained from over 16,000 transactions, we can connect you and your clients with other real estate professionals who meet the same high standards you do for customer service, expertise, and integrity. Those professionals can also be excellent referral sources. We also host regular events for the real estate community that offer excellent social, professional, and networking opportunities.

There’s a reason why Cornerstone has a five-star rating from Google reviews. And because the government sets title insurance rates, your clients don’t pay more when they use Cornerstone. But they certainly get more. The earlier your clients are in the commercial buying process, the more we can help. If the American Dream of property ownership is important to your clients, please let us help you make their dreams a reality.