Title Insurance: Residential vs. Commercial

Title insurance is a must-have when investing in real estate of any kind.

A lot can happen with a property from the beginning of its history until now - including issues that may cloud its title. Thankfully, though, title insurance acts as a layer of protection against anything that may interfere with the rights of the new owner.

Does it matter what type of property it is? Is all title insurance the same? Believe it or not, while the protection is much the same, the purpose of title insurance can vary for residential vs. commercial properties.

Here is how title insurance relates to both.

Residential Title Insurance

When it comes to residential title insurance, the policy is usually protecting the title to a single-family unit. There is often a buyer and a seller and perhaps a loan for an average sum of money.

The title insurance in this instance will cover the property, protecting it from various issues, such as recording errors, fraud or forgery, unpaid taxes, unknown heirs, missing wills, easements, judgments, liens, and so on.

Residential title insurance may come in handy if the new owner decides to put in a new pool before summer - only to find that there is an easement on the property that doesn’t allow free access to the whole property. Or, what if an unknown heir shows up out of the blue and wants to claim rights to the property?

Investing in title insurance for residential property can give homeowners confidence and comfort in knowing that their rights to their property are not going to be jeopardized by any title issues that arise.

Commercial Title Insurance

Commercial properties encounter different situations when it comes to their title insurance. They still receive protection knowing that their title was cleared through a title search and that should any title issues show up in the future, they are protected. Here, however, there are more people involved with more money at stake. Yet, despite the complex commercial titles, every investor wants to protect their interest.

Commercial title searches are more involved and their title insurance underwriting process is, too. They often have to make sure every aspect is addressed before issuing the policy because commercial title issues or claims can be significantly more costly - and difficult - to fight than those for residential property.

The Cost of Title Insurance

The cost of title insurance will vary from property to property - and from title company to title company. In Virginia, there are no fixed rates for title insurance, but rather each title company’s rates are regulated by the State Corporation Commission’s Bureau of Insurance.

Because the cost is based upon the type of policy, the coverage elected, the property’s value/sale price, and, of course, the title company, no specific amounts can be given. Though it is safe to assume that the higher the cost of the property, the higher the cost of the title insurance. Since more money is often invested in commercial purchases, you can expect this type of title insurance policy to be more costly.

The good news is that this title insurance premium will only need to be paid one time at closing - and it will offer protection for as long as the owner has an interest, residential or commercial.

Title Insurance with The Closers

Whether you are investing in a residential or commercial space, the title experts at The Closers are here to help you. We provide title services and title insurance for all types of properties - and have the experience to address any challenges along the way.

If you would like to learn more or you are ready to get started, contact us today at (757) 595-4707.