Commercial Real Estate, Development & Leasing

For most people, the purchase of their home is the single largest investment of their lifetime. Owner’s title insurance protects the ownership of that investment. When you have an owner’s title insurance policy, the insurance company uses their attorneys to defend you against claims for issues such as forged deeds, missing interests, incorrect property descriptions, un-discharged prior owner mortgages, and other claims against the title of your home at no extra charge to you.

Title insurance provides valuable protection for property buyers. Like all forms of insurance, however, it does not cover every conceivable problem, and it is important to understand its limitations. Title insurance is based on examination of the county real estate records and generally will not cover problems arising from facts outside of the recorded chain of title. One common problem not covered by title insurance is boundary line issues, which would be revealed by a survey of the property (for example, it turns out that your fence is actually two feet onto your neighbor's property). Unrecorded mechanics' liens and unpaid public utility bills are other examples. The title insurance policy will describe many of the situations it does not cover; these same limitations will generally be found in an attorney's title examination. A qualified real property attorney can assist in helping a buyer understand the limits of a title policy and can take care of issues not covered by the policy.

A lien is any legal claim on real property that acts as a security for the payment of a debt or other obligation. If the debt is not repaid as promised, the lender or the lien holder can foreclose its claim on the property and force a public sale to pay the debt. The most common form of a lien on property is a mortgage. While all mortgages are liens, not all liens are mortgages. Other types of liens are commonly encountered, and part of the work of the real property attorney is to check for outstanding liens at the time a real estate transaction closes. These include such things as judgment liens resulting from a court judgment against the owners, mechanics’ liens resulting from recent improvements to the property, liens for unpaid taxes, and liens for unpaid municipal utilities such as water and sewer. Often, if a seller is divorced, the divorce decree will provide the ex-spouse with a lien on the couple's property to be paid at the time of sale.

Contingencies are escape hatches in a real estate contract. They let you walk away from the deal without penalty if certain conditions are not met. You might, for example, sign a contract to buy a building, but make your obligation to close contingent on things such as the following:

Your being able to get a mortgage loan of at least 75% of the purchase price.

Your having a contractor inspect the condition of the building and your being satisfied with the contractor’s report.

Your determination that the building can be renovated to your satisfaction.

Your being satisfied with a report you will order concerning environmental hazards.

Your lawyer can help you put the right contingencies in the contract for your deal.

No. Representations and warranties are always a matter for negotiation. There are many commercial real estate contracts that say, in effect: "The property is being sold ‘as is.’ Seller makes no representations or warranties."

When a seller is making representations and warranties, the seller’s lawyer may insist on adding the cautionary words, " . . . to the best of seller’s knowledge." That way, the seller is not guaranteeing unknown facts or conditions.

If you are buying income-producing property, your lawyer may want the seller to guarantee the accuracy of the rental income figures as well as the expenses the seller has represented to you. You may also want the sales contract to include a statement that the seller is aware of no hidden defects in the building – that is, defects that your inspector is unlikely to discover.