What type of title insurance is required in a commercial real estate transaction?

In California, title insurance is required for commercial real estate transactions to protect the buyer and lender from any potential title defects that could arise. Title insurance is a form of indemnity insurance that compensates the insured in the event that a title dispute is initiated against them. It helps protect lenders and buyers against losses due to mistakes or omissions in title searches, forged documents, undisclosed interests, or any other matters affecting title to the property. In California, two types of title insurance are generally required in commercial real estate transactions. The first is called an Owner’s Policy. This type of policy provides coverage to the buyer, up to the purchase price, against any encumbrances on the title of the property - such as liens, mortgages, or other claims - that were not disclosed in the title search. The second type of title insurance required in California is a Lender’s Policy. This type of policy provides coverage to the lender up to the amount of the loan, again, against any undisclosed encumbrances on the title. The cost of title insurance varies depending on the size of the transaction and the state in which the property is located. In California, the cost of title insurance is typically based on the purchase price of the property, with a minimum amount typically set by state law. It is important to note that when considering purchasing title insurance, not all title companies are the same and it is important to research and compare costs of different title companies before committing to any one.

What type of title insurance is required in a commercial real estate transaction?

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