If you are buying a veterinary practice and real estate is included in the deal, title commitment and surveys are an important part of the due diligence process. Given the complexities involved in acquiring commercial property, it is essential to work with a capable veterinary attorney.
At Mahan Law, we are here to guide you through all aspects of buying a veterinary practice. Although title defects and encumbrances are common in commercial real estate transactions, we have the skills and experience to find solutions and will work to protect your interests. Contact our office today for a consultation.
What is a title commitment?
Performing appropriate due diligence of commercial property is essential for a successful veterinary purchase. The first step is to obtain a title commitment from a title company. A title commitment is not a title insurance policy, but rather a promise to issue a title policy on a piece of property. In short, it commits or binds the insurer to issue the policy as specified in the commitment.
Before issuing a commitment, the title company will research the title policy's history and identify recorded documents that may affect a title, such as easements, liens, restrictive covenants, and other documents of record. The title company will provide a title insurance policy once certain conditions are met, including:
- Payoff of the seller's current mortgage
- Proof of the buyer's new mortgage
- Payment of any outstanding taxes, assessments, or liens against the property
- A property deed showing transfer of ownership
- A new survey
The title commitment also stipulates any exceptions to title or items not being insured by the title company. These items include covenants, conditions, and restrictions (CC&Rs), easements (e.g. utility or access), possessors in interest to the property, survey discrepancies, mechanic's liens, taxes, and assessments not yet due or payable, special assessments not yet certified, and other encumbrances.
The purpose of standard exceptions is to limit the title company's liability for items that are not disclosed in the public record or that would be revealed by a survey or inspection of the property.
Most title exceptions are customary, however, and should not affect the sale of the property. Also, many standard exceptions can be removed either by a Comprehensive Endorsement or an affidavit from the property owner.
While this sounds straightforward, determining the best course of action for curing title defects and removing encumbrances requires working with an attorney who is knowledgeable in real estate law. As the owner of a veterinary clinic, lead attorney Anthony Mahan knows the ins and outs of title commitments involving commercial real estate.
Property Surveys When Buying a Veterinary Practice
Once you have obtained the title commitment, it is necessary to have the property surveyed by a professional land surveyor. The survey will disclose matters such as:
- Potential environmental issues
In short, the survey will provide you with useful information about the condition of the property, determine whether any easements included in the public record will affect the property's use, and reveal easements that do not appear in the public record.
A few common surveys in real estate transactions include as-built surveys, boundary or land surveys, and ALTA surveys:
- As-built surveys are designed to show any and all improvements to land typically involving new construction but may not include information on the title or boundary issues.
- Boundary or land surveys locate and identify boundary lines between privately held parcels of land, indicate the extent of any easements or encroachments and the limitations imposed on the property by state or local regulations.
- ALTA (American Land Title Association) surveys are prepared according to specific standards adopted by ALTA that shows property boundaries, improvement information (e.g. height, size, setbacks), and recorded title items such as easements and access.
While the type of survey required is often a specific requirement for lender financing, an ALTA survey is the most comprehensive and common in commercial property transactions involving buildings.
How Mahan Law Can Help with Title Commitment and Surveys
Because of the challenges associated with closing commercial property transactions, it is crucial to have the informed representation we provide. Our firm collaborates with attorneys and real estate professionals nationwide who have in-depth knowledge of the local veterinary markets.
We regularly conduct due diligence of title commitments and surveys and work with title companies to resolve title defects and encumbrance problems. Let us help you navigate the financial and legal aspects of purchasing veterinary real estate and engage in a successful transaction.
Contact Our Experienced Veterinary Attorneys Today!
Buying a veterinary practice is a significant investment and even more so when the deal includes property with title commitment and surveys. You can trust us to help you navigate all aspects of the transaction and achieve your objectives. Contact us today to get started.