I'M LEASING THE SPACE NOT BUYING THE PROPERTY, SO WHY CHECK ITS TITLE?

If you are considering leasing space it is a good idea to check the title to the underlying property. Besides assuring yourself that the landlord actually owns the property, you may discover an encumbrance which is inconsistent with your business. For example, I once found a recorded restriction on outdoor retail sales in a commercial shopping center when my client wanted to offer outside dining. Even the landlord was surprised. We made removal of the restriction a condition of the lease.

Other title issues to look for are recorded liens on the property which will tell you something about what sort of a business person your landlord is; easements that might impinge on your space, such as the right to run utility lines through, over or under it; and special property tax assessments that you might be asked to pay part of.

So how do you check the title? Obtain a current title report or preliminary title insurance commitment on the premises and the building in which it is located. Try to get the landlord to supply the report but if that is not possible or the landlord's most recent report is a bit stale, then get your own. Ask a local title insurance company for a "preliminary leasehold title insurance commitment". Most title companies are happy to provide the report, though if you do not plan to purchase the insurance ask about the "cancellation fee". It is usually small. Some title companies will only provide the information in the form of a "limited liability guarantee" if they learn you will not be buying the insurance; LandAmerica Commercial Services, for example, does this and currently charges $250 plus sales tax. When you are risking thousands of dollars on a new location this can be a very good investment.