Who pays for the title insurance in commercial transactions?


Usually it is the buyer who pays for the title insurance in commercial transactions.

However, it really depends on how negotiations go with the seller and the buyer. States and counties have different customs as to who pays for the title insurance costs. It may be split equally between buyer and seller. There are also instances when the seller pays for the owner's title policy while the buyer pays for the lender's title insurance policy. Whatever is agreed upon between the two parties should be duly noted in the contract so that everything about the title insurance policy is stated in black and while.

It is the buyer's main responsibility to protect his investment, and paying for title insurance is included in this. In commercial transactions, the buyer usually also pays for:

  • Geo-technical studies (the compaction of the land, whether it lies on a fault, the investigation of the land's subsurface environment)
  • Municipal transfer taxes
  • Due diligence that relates to environmental issues. This may include checking whether the property is contaminated and whether this can be cleared or whether the transaction should be terminated.
  • Municipal transfer taxes
  • Property inspection and survey costs
  • Property expenses during and after closing

Meanwhile, the seller will pay for expenses that related to establishing what he owns. These expenses include county and state taxes, UCC searches, title policy with extended coverage, and title clearance expenses.

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