Whether you are acquiring your first property or expanding your company's footprint, one critical step that often gets overlooked amidst the excitement of a real estate deal is title and survey review. We have seen firsthand how this essential step can make or break a deal. For small and large businesses alike, ensuring you get clean title and have a clear understanding of the property's boundaries and legal rights is not just "due diligence," it is a crucial step to protect against costly legal issues.
The Importance of Title & Survey Review
A review of a title commitment confirms the seller owns the property and has the legal right to sell it. Without this confirmation, buyers can inherit undisclosed liens, outdated mortgages, restrictive covenants, easements, or unresolved ownership claims. Any of these issues can delay closing, reduce the value of the property, and create legal disputes.
Survey review is equally as important as title review and the two go hand in hand. A survey reveals the property's physical boundaries and identifies easements, encroachments, setbacks, and other conditions that impact land use. These issues may be detailed on the title commitment but are often misunderstood until they are revealed by a current survey of the property.
Title insurance also plays a major role. A clean title is usually a prerequisite for a title insurance policy, which protects against future claims or undiscovered issues. Further, most commercial lenders will not fund a transaction without it.
A Real Estate Lawyer's Role in the Title & Survey Review Process
Real estate lawyers serve as both legal translators and risk managers in the title and survey review process. On the title side, they examine the title commitment issued by the title company, flag concerning exceptions, and negotiate their removal or mitigation. Lawyers will also ensure that the property title complies with the representations and warranties in the purchase agreement.
When it comes to the survey, it is cross-referenced with the title documents to identify any conflicts, encroachments, or unrecorded easements. The analysis focuses on how the property's physical and legal boundaries could affect intended use, such as future expansion plans, parking layout, compliance with local zoning regulations, or more.
Beyond identifying issues, the goal of a real estate attorney is to help mitigate risk. This may involve recommending specific endorsements to the title policy, drafting or revising agreements, or coordinating with the title company, engineers, and lenders to resolve issues before closing. It is also essential to ensure the proper issuance and recording of deeds and other legal documents.
Small Business, Big Stakes
Small business owners often invest their personal savings and take significant risks when acquiring property. That is specifically why due diligence in commercial real estate transactions is not just for major corporations. It is even more crucial when the stakes are personal, margins are tighter, and an owner stands to lose everything. This makes careful legal diligence not a luxury for small businesses, but a necessity.
If you are buying, leasing, or developing property, a real estate attorney can help you uncover hidden risks, negotiate protections, and close with clarity and peace of mind.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
