Title Company - New Construction

A Title Company’s Role In Commercial Property and Construction

If you are searching for commercial property to purchase, you may find that the process is more than just the seller signing the land over.  There are many steps to making sure the property is the right fit for you and your company.  A Title Company is key to this process.  A title company plays an important role when purchasing a new home or commercial property.  When purchasing property, the title company researches the property title, provides title insurance, maintains an escrow account, handles closing documentation, and works with your lender to monitor the progression of construction. The title company you select acts as a neutral party between you, the seller, mortgage lender, and insurance company.

Title Search

During the due diligence period, your title company begins with a title search.  A title serves as evidence to ownership.  During the title search, they look for liens, outstanding mortgages, unpaid taxes, easements, and other items that impact the purchase of your property.  The goal of researching the title is to ensure that the person selling the land can rightfully do so.  A thorough investigation occurs by examining public records and various databases.  Your title company issues a commitment for insurance when the investigation is complete and no disputes are found.  A commitment outlines the closing stipulations, exclusions, and insurance policies.

Title Insurance

Insurance plays an integral part in a commercial real estate transaction, as it protects you and the lender from potential title defects.  Sometimes title issues are hard to find and go undetected, such as filing errors or unnamed successors.  Insuring your title safeguards you from these problems.  Once the title company determines that your title is clean, then they will work with an underwriter to develop the policy.  In most cases, there is a policy for you and for your lender.  Insurance goes into effect after closing and when documents are recorded.

Construction Draws

When you close on your commercial property and construction commences, some title companies handle construction disbursements between your lender and contractor.  Your title company works with your lender by monitoring construction loan draws.  The title company sets up an escrow account for your construction project.  Your builder requests construction draws throughout the construction process for completed work and materials. When your builder requests funds, your title company verifies the work is complete before releasing the funds.  Contractors can place a lien on your property if payment isn’t received during a certain time period.  Lien waivers are collected from contractors and various suppliers prior to final payment.


Next Steps: