In theory, a commercial property title search would run exactly the same way as a residential property. The records are generally in the same location and the logic behind running a search is the same in the sense that the same deed books and files are being examined. However, there are a couple differences to be aware of.
First of all, there may be UCC filings on a commercial property to be conscious of, which are less likely in a residential property. A UCC filing governs commercial transactions and essentially states that an individual claims an interest in someone else’s property, typically as collateral for a debt. These are filed in the Secretary of State’s office which allows the creditor to have a security interest in the debtor’s personal property. There could also be leasehold interests, which are created by a written lease and gives someone the possession and use of a property for a stated period of time.
A name frequency factor could also exist. Normally, the name on a commercial property is a corporate entity, not an individual. Now, this corporate entity may have several variations of the name. Sometimes it may be listed as Inc., while other times it may be written out as incorporated. There could also be abbreviations of that corporation. In some cases, a parent and subsidiary corporation could own the building and operate the business. Thus, with all of these variations, making sure that the correct records are analyzed for that title search is an important part in making sure a commercial property title search is performed correctly.
In addition, there can be records on a commercial property which normally aren’t seen on a residential property. For instance, blanket mortgages that cover all properties that a particular entity may own. There may also be common deeds between multiple parcels at that commercial location. For example, a house is normally only a half-acre or less with a single building or structure on it. A commercial property may be larger in size, have more complex ownership, or have multiple complex structures on that parcel. In addition, there may be a variation of names on the tax assessor versus the ownership. In many cases, a commercial property owner will have a tax preparer or agent handle their real estate tax payments for them, whose name is then on the tax assessor’s site. Therefore, a person listed on the tax assessor is not necessarily the owner; they may simply be an agent that handles paying the taxes.
Another variable that can be found with commercial real estate is a sale and leaseback. This occurs when an individual who owns a property sells it to a corporation and then leases it back to the entity that’s actually running the business in that location. When this occurs there can be clauses for the tenant which affects the property. There may be purchase option clauses or clauses to make sure that the property is maintained with certain zoning.
Lastly, a big factor in commercial property title search is the variation of types of property. For example, a single barber shop in a small building requires much less complex research than a mall that may have multiple parcels or the Empire State Building which may get into ground leases and air rights and all other types of factors.
So, when getting a title search on a commercial property, be sure to speak with a provider who has the experience, knowledge, and capability of performing the title search to the level that is needed for commercial property.