Similar to purchasing an insurance policy when you finance a new vehicle, you have to purchase a title insurance policy when financing a new home or commercial property. What many people don’t know is that you should also purchase title insurance when leasing a home or commercial business space.
What Is Title Insurance?
Title insurance protects the buyer of a home or commercial property from any potential endangerments and functions to protect the interests of a buyer, owner, or lessee. Title companies like Boundary Title and Escrow protect the buyer, but also real estate agents, lenders, and sellers by offering different types of title insurance. The main types are a leaseholder’s policy and an owner’s policy.
An owner’s title insurance policy protects the owner from anything negative that might affect the sale of a property including fraud, tax liens, tampering of documents. On the other hand, a leaseholder title insurance policy protects from potential damages surrounding the claim on a property that is being leased. Let’s see why purchasing leaseholder title insurance is just as important as owner’s title insurance.
Leasehold Title Insurance Benefits
This type of title insurance protects from property ownership discrepancies. This is seen most with commercial properties. A property might be owned by a company, and a lease to you could be signed with a variation of the name or a different name by the operating company. Leasehold title insurance would protect you in this situation where the lessor doesn’t actually own the property. Again regarding commercial property, if your business relies on its location but you are forced to move you will have to give up your locational goodwill. A leaseholder title insurance policy would provide protection in this situation. The ultimate purpose of leaseholder title insurance is to provide assurance that your investment and assets are covered and protected in the event of a lease discrepancy.
Common Distractions and Misconceptions
There are three big misconceptions or distractions observed when discussing leasehold title insurance policies. Unfortunately, not all landlords or owners encourage tenants to purchase their own leasehold title insurance. To protect yourself and your lease, keep an ear out for these common situations urging you to opt out of leaseholder title insurance.
Commercial property tenants are often told securing leasehold title insurance isn’t typical of other tenants in the area. This by no means should turn you away from insuring your lease and investments into a property. Something else to look out for is a landlord stating or proving they have owner’s title insurance. You can still get your own leasehold title insurance. Owner’s insurance doesn’t mean there isn’t some kind of title defect that could result in unforeseen eviction later on. The owner’s title insurance policy also does not cover tenants in the case of property loss or damage due to fire, weather, or the like. You might think of passing on leaseholder title insurance to save money at closing. Premiums can be high, but passing isn’t recommended. The amount you will pay for insurance will not be nearly as high as if there were to be damages or eviction resulting in your business having to close.
Securing Title Insurance For Your Lease
You have decided to protect your lease with leasehold title insurance. Congratulation! We have a few next steps to help you proceed. Securing title insurance for your property is a simple process, and Boundary Title can guide you through it with ease. First, you can get a free quote online with our secure form. Then, one of our expert title insurance agents will contact you to move forward in the process and ensure total satisfaction.
Contact Us Today!
No matter your need — residential, commercial, or refinance — our passionate title and escrow experts will guide you through even the most challenging situation to provide the best service possible. We stand out in the industry, seeking client satisfaction every step of the way. Contact Boundary Title for all your residential and commercial title needs as well as escrow services.
This material is provided as a courtesy and for educational purposes only. Please consult your title professional for specific information regarding your situation.