Resolving commercial property title objections before closing on a commercial property can be instrumental to the conveyance of good and marketable title of the property which in turn could affect future sales or use.
In this blog post, we’ll discuss what a title objection is, and explore four tips to help you navigate this commercial real estate roadblock.
What is a title objection?
A title objection letter is used by a prospective real estate purchaser to comment on or raise any potential concerns regarding the title report or commitment issued by the title company. This notifies the seller of the buyer’s request for resolution or correction to specific title issues before closing on the property. For example, a buyer would typically want proof of the seller’s existing loan being paid off prior to the time of taking ownership of the property. Other common objections would include old restrictions or zoning that is no longer enforced.
Additionally, the title search may include people or entities on a property’s title that the seller did not list in the purchase agreement. This can be caused by a variety of title issues, such as non-probated estates of present/prior owners, transfers to trustees of owner-created trusts, transfers from individual owners to owned entities, divorces, and purchases by one spouse only.
Even experienced commercial real estate professionals can be challenged by the many facets of title objections. When working through a title review, here are four things to keep in mind.
Sometimes buyers may seek endorsements, or additional title insurance above and beyond standard coverage. Depending on the endorsements being sought, additional reports, inspections or a survey may be needed by the title underwriter to issue. These requests should be included in the title objection letter to verify the availability on a specific property or policy.
- The title objection timeline
Once the title report or commitment is sent to all parties, the buyer, buyer’s agent or counsel would confirm the exact date that objections to the title are due and should approve or object to the report within that contractual deadline. The title commitment includes a detailed list of requirements the underwriter will need prior to issuing a policy along with any exceptions to the title policy.
- Ensuring title objection deadlines are met
The buyer’s deadline to object to any title items is typically detailed in the purchase agreement and will vary with each transaction. At the Seibold Group, we prepare and circulate a timeline to all parties involved in the transaction and send out reminders of the due dates. If the buyer does not make an objection to portions of the title report that would make the property unsuitable for their intended use, they could impact future use or marketability. All buyers should carefully review their purchase agreement and act before the expiration date.
- Getting support throughout the process
Depending on their experience, some parties may not be familiar with the process of title objections. Although escrow officers can’t provide advice, we can assist with copies of documents, samples of endorsements and a proforma of the policies to be issued at closing.
Parties to the transaction should also note, if they have any doubt about the title report they should seek adequate legal guidance for the transaction. Work with your escrow officer to ensure the documents for review and response are available to be completed by both the buyer and seller.
Receive Professional Counsel
As an experienced national escrow officer, my goal is to ensure you understand the title objection deadline, assist with communicating to title officer, and receive a mutually agreeable policy at the closing. Maintaining clarity and communication throughout the title objection process is vital to receiving the desired title policy and endorsements when closing your deal.
Have questions about terms in your own transaction? Shoot me an email, email@example.com to see how I can help.