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Make the Right Move When Looking for a New Office

Dave Thomas

February 28, 2013

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In a day and age where a bad financial move can cost your small business dearly, do you know the right way to go about purchasing office space?

While it may seem rather clear to business owners on how to go about purchasing new digs to start or grow their companies, there are many factors that go into getting it done correctly the first time around.

One of the key facets of such a purpose is making sure you have title insurance.

For those not up to speed on title insurance, there are essentially two forms of coverage:

Lender's Title Insurance - For much of the nation, the mortgage lender requires that the purchaser acquire a lender's title insurance policy to protect the lender's security interest in the real estate. Lender's title insurance is distributed for the figure of the mortgage loan. The amount of coverage drops, and finally is gone as the mortgage loan is paid off.

Owner's Title Insurance - This coverage protects the purchaser's interest and is typically distributed for the figure of the purchase price of the property. Coverage dictates that the insurer will meet (pay) all valid claims for the title as insured.

With title insurance, you and your small business are protected against a number of potential issues, including the possibility of a claim from another owner that they in fact own part of the land you thought you purchased solely for your company. If that scenario happens, you could find yourself spending more time in legal proceedings as opposed to devoting time to your business.

Avoid Liens and Burdens with Title Insurance

When you have title insurance, you have protection in place that validates your claim to the property you just purchased. The coverage also asserts that the title is free from all liens and burdens minus those that are noted.

So, still considering not paying the money for title insurance?

Yes, while saving money in starting up or growing your business is understandable, think about the possible financial repercussions should you not have the right title coverage in place.

For those naysayers who feel they can swing a deal without title insurance, keep in mind that legally defending against a title issue or to gain access to the property itself is typically much more expensive than what you would be paying on a title insurance premium. With attorney fees alone, you could be looking at thousands and thousands of dollars in court costs.

In the event you are purchasing a property for your company’s business, also take note that many lending institutions will not loan funds to a business owner unless they agree to purchase a "mortgagee" title policy.

With the policy in place, the lender’s investment is protected by paying the mortgage (loan amount) if a title defect voids your title. When you purchase a property, the title company also distributes an owner´s policy (unless you choose to reject it in writing) that will protect you against the covered risks discussed in the policy.

At the end of the day, having title insurance in place before buying a property alleviates any concerns you may have, especially those over who else might have a hand in the property prior to it landing in your hands.

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