Tag Archives: ucc filings

Important Elements Of Commercial Property Title That You Need To Know

130In 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.

imagesIn 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.

Hidden Property Liens

If you are going to spend time looking for liens on real estate you don’t want to just get the most basic obvious liens, you want to make sure you are getting every lien there is, including the hidden liens. There are many types of liens but here are the seven most common types of hidden liens.

UCC Filings – Also known as universal commercial code filings, these are normally not filed in the land records office but rather with the secretary of state. If you are looking in the county records you may not find UCCs that exist for the property. The secretary of state may have a filing that can encumber the personal property.

Mechanics liens – These are liens and encumbrances that occur when a contractor, builder, or an individual does work on a property, for example putting on a new roof, and if the property owner did not pay for the roof then the contractor has a lien by statute on the property even if there is nothing filed in land records. This is the law in many, but not all, states. Most counties have a very specific procedure for the contractor to be protected on their efforts in improving that piece of real estate.

Civil court records – A property owner could have a judgment against them personally that automatically attaches to their property by statute. If this were the case it would not be stated in the land records. You would need to look in the civil court records, small claims and superior court to find something like this.

Probate records – Probate records can put encumbrances on a property. If there are transfers of property by statute, in the case of death or divorce, then that can affect the property and have liens accrued to the property.

Delinquent taxes –If you check the tax assessor’s office you may find that there are past due taxes on a property. If someone were to buy a property now and the previous property owner did not pay their property taxes for the previous year the new owner would be responsible for paying those delinquent taxes which could potentially be thousands of dollars.

HOA underfunding – If you are buying a house in a homeowners association or a condo complex and that complex has obligations like fixing the pool or paving the streets and they have not accrued money in their budget over the years, that HOA underfunding becomes a defacto lien on the properties because whoever owns them is going to have to pay for it when it comes due.

Easements – If you look at a property’s mortgages and deeds you may not find that there are current easements that allow adjacent property owners to have access to your property or even financially benefit from it. Generally, easements are written and recorded with the local assessor’s office so you would need to look there for any existing easements.

Once a lien has attached to a property there are very specific methods to have that lien removed. One way is to have the lien holder actually sign a release of lien that has to be filed in the land records. Until it’s filed, it will still show up on the title search. Another way is by statute. There are certain types of liens that automatically become inactive after a certain period of time. This depends on the type of lien, the statutes of the county, and what the laws were when the lien was filed.

When looking for liens on a specific property, remember to check for UCC filings, mechanics liens, the civil court records for judgments, probate records, delinquent taxes, HOA underfunding, and easements.