Commercial property litigation can be incredibly expensive. Many commercial properties are worth millions of dollars, and a commercial development project may have investments reaching into the hundreds of millions.
Because these types of assets are at stake, it is important to ensure that there are not any title defects or issues with that property during the transaction. Below are three examples of potential title defects to keep in mind.
A creditor has a lien on the property
First and foremost, a creditor or someone else who has a financial claim against that property may have a lien on the property itself. Liens generally need to be addressed before the property can be sold. There could be a mechanic’s lien for a contractor who was never paid, for example, and that debt needs to be satisfied.
Multiple parties own the property
Issues can also occur when there are multiple owners. Say that two siblings inherited commercial property from a parent who passed away. One of the siblings is now trying to sell the property to a developer. Do they actually have the authority to do so on their own, or could there be conflicts with the other sibling, who also has an ownership share?
Documents contain errors or are fraudulent
Finally, it is important to check all related documentation carefully. There could be certain errors regarding boundary lines, easements or other such details. In extreme cases, there could even be fraudulent or forged documents. Conducting due diligence is crucial.
These are just three examples of potential issues that can derail a development project or a commercial property transaction. Parties involved need to understand what legal steps they can take to rectify such situations and move forward appropriately.