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Two seller situations that can lead to future title issues for buyers

On Behalf of | Oct 5, 2021 | Real Estate Law |

Buying real estate is a major investment, especially when you want to purchase a commercial or industrial parcel. Owning the property where you do business can save you money in the long run but will cost a lot more up front than just signing a commercial lease.

Residential real estate in Massachusetts is expensive, but commercial real estate can be multiple times more costly per square foot. That extra price doesn’t inherently mean your ownership will be problem-free. Many of the same issues that plague residential real estate closings can also affect commercial transactions.

Title claims, for example, could arise that could lead to expensive litigation. If your company doesn’t successfully defend against those claims, you might have to relocate, which could be a devastating financial blow for your company. Identifying risk factors for future title claims during a purchase could help you avoid complications after you assumed possession of the property.

Real estate sold during or right after a divorce

Businesses and professional practices are often marital property, but that doesn’t stop people from trying to liquidate their assets and manipulate divorce proceedings by selling something without their spouse’s consent or knowledge.

Buying from someone who admits that they have just filed or intended to soon file a divorce might mean that their spouse could make a claim against the title in the future in certain situations. You don’t have to necessarily avoid buying real estate from someone divorced, but it is important to recognize the role of timing and how the sale of real estate could give rise to claims of dissipation against the seller or title claims against you as the buyer.

Property sold as part of estate administration

Passing down businesses or real estate from one generation to the next isn’t easy. Sometimes, an executor overlooks a beneficiary or heir who should receive a portion of the title to a property or its value. Other times, mistakes in estate administration lead to later challenges and title claims.

Estate-related title claims are among the most common title issues, as heirs may not know for years that they did not receive notification or their fair portion of an estate. Your business will need to be ready to defend against that claim in court.

Responding appropriately to a title claim will likely involve retaining an attorney and preparing for real estate litigation. Protecting your business may require protecting your investment in the property where you operate.

 

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