Buying a warehose for $1M that is FSBO, do I need an ALTA policy of Title insurance, or will sandard title do?

Question

My company is buying a warehouse in the $1M range. It is for sale by owner, and we are buying it without an agent. I am preparing an offer sheet now and I'm wondering if I should be elect to obtain a "full-coverage extended alta policy of title insurance" or if the standard policy is sufficient.

If I do elect to obtain one, is it standard practice to have the seller or buyer pay for it at closing? What are the estimated costs?

Answer 1

Not enough information.  Is this a cash sale, or are you financing it?  If there's a lender, it will be up to them.  If there's no lender, you can do whatever you want.

REgarding the costs and paying for it, it's a flat percentage of the sales price, usually somewhere between 2% and 4%, by county. So it's not negotiable.  But who pays for it, IS negotiable - part of the sales process.

Answer 2

Your best move would be to talk to various title insurance companies and ask to speak to the "title officer". That is usually the person who knows the ins and outs of title insurance, whereas the sales reps really dont know much.

There are some big companies like Fidelity Title, First American Title, or Chicago Title.

in California, it is customary for the seller to pay this cost, and you can probably convince them to since they are saving a fortune on real estate commissions. The law does not dictate who pays, but its extremely common for California sellers to pay this. It's a negotiable element of the sale.

Lastly, do yourself a favor and get either a commercial real estate agent involved or an attorney involved in assisting YOUR SIDE of the deal. Everyone thinks they know everything about real estate, but sadly, what you cannot see, WILL hurt you.

You can keep the cost of this low, by telling them that you need assistance ONLY with contract review, and pitfall avoidance, but that you intend to do the lion's share of the work yourself..... You should be able to find someone that will guide your company for a reasonable flat fee. The end result is that there will be components of this transaction that you never knew existed and neither does the seller. Having a just a bare minimum of professional guidance can go a LONG WAY in protecting you.