LEASING COMMERCIAL SPACE AS A TENANT: PART THREE

USE A TITLE REPORT TO YOUR ADVANTAGE
As part of your due diligence before entering into the lease it is often advisable to 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. 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 when my client wanted to offer outside dining. Even the landlord was surprised. We made removal of the restriction a condition of the lease.