There are a number of potential issues that can impact your commercial transaction. In this article, we are going to discuss two key issues that can potentially delay your commercial transaction.
Construction on the Property
One key issue that could potentially delay your commercial transaction occurs when there has been recent construction or there will be construction on the property and the title company was not informed.
If the title company has been asked to delete the mechanic’s lien exception on the buyer’s title insurance policy, the title insurance company must establish that the buyer will not be subject to any potential mechanic’s liens that may arise because of work the seller performed on the property. If the title company has been asked to delete the mechanic’s lien on the new loan policy, in addition to ensuring the loan policy won’t be subject to mechanic’s liens from the seller’s work, the title company must establish that the loan policy will have priority over any potential mechanic’s liens that may arise because of new work that the buyer will perform on the property.
Not informing the title company well in advance of closing of any recent construction work performed by the seller or new construction work that will be performed by the buyer will delay closing as the title insurance company must perform significant due diligence work to protect the parties it will be insuring.
A second key issue that can potentially delay your commercial transaction is when there is pending litigation that involves the property or the owner of the property. If there is pending litigation and it is not disclosed to the title company early in the process, the title company may not have the time to do a thorough underwriting analysis or request and review documentation prior to closing. Both the buyer and new lender would not want an exception on their title insurance policies regarding the pending litigation so it would most likely have to be addressed in advance of closing.