3 Title Defects to Avoid on a Commercial Property Lease

When you have a commercial property lease there are certain things that you need to look for.  You would want to review the verbiage carefully, and make sure that there are no title defects whatsoever.

What is a Title Defect?

A title defect is a factor that calls into question the validity of the title on a property.  You may hear people in the real estate business refer to the “title defect” as a “cloud on the title.”  There are a list of things that are considered to be title defects. 

Three Title Defects to Avoid

1. One of the main things that you should be wary of is that proper procedure is followed as stated in local real estate law.  Most of the time the title defect is something as simple as failure to have one of the signatures on the lease.  Look closely at the lease if you are going to be the lessee of the commercial space.  Look even closer if you intend to be the leaser. Regarding signatures as being title defects, make sure that all names correspond with their titles as relative to the property. 
2. A second possible defect aside from improper signatures include any unmentioned liens on the property.  You will want to research as much as possible on the property prior to leasing the space.  You to check to see if all liens on the property have been resolved.  If not, then inevitably this will present itself as a title defect.  All liens should be cleared and reported. If the liens are not reported then the title will be considered defective which can only mean turmoil for you.  This is why you should do as much research as possible on the property just to make sure that everything is clear.
3. Make sure that all claims to the property have been filed appropriately.  This means that the claims should be filed at the appropriate government office – whether that is at the courts or the land assessor’s office, you need to be sure that all claims and property records are filed accordingly.  Claim information should also be current if it is dated then a possible title defect may come into effect. 

Getting Help

As always, you might consider speaking with a lawyer who specializes in real estate before doing anything with a commercial lease.  The lawyer can give you a better perspective as well as legal advice and guidance on any title defects that may be evident in the lease.