Commercial title and closings in Florida

What makes a commercial file different?

The policy and the premium work as they do on a house. What changes is who is signing, how much has to be searched, and what the parties have negotiated about the money.

• The parties are entities. A corporation, an LLC, a partnership or a trust can only convey or borrow through someone with authority to sign for it, and the underwriter will not insure a signature until that authority is shown.
• The search runs against more names. Judgments, liens and UCC filings against the entities and their principals, on both sides, not only against the land.
• The lender asks for more coverage. A commercial loan policy usually comes with a list of endorsements, and each is a line on the quote.
• The money moves on the parties' terms. Holdbacks, staged disbursement, more than one lender, prorated rents and deposits, and leases assigned to the buyer.

What does the premium come to?

The same schedule as any Florida title policy. The premium is adopted by rule and the rates apply throughout the state (Fla. Stat. § 627.782; Fla. Admin. Code R. 69O-186.003). A commercial price is simply further up it:

Where the seller's own title was insured within the last three years and we and the underwriter keep a copy of that policy, the reissue rate applies to the part of the coverage the old policy reached. The Florida title insurance calculator works out either rate for any price.

Endorsements are charged on top of the premium, and we quote them line by line once the lender has said which it needs.

What are the deed stamps on a commercial sale?

The documentary stamp tax on the deed is 70 cents per $100 of consideration everywhere in Florida except Miami-Dade (Fla. Stat. § 201.02): $14,000 on a $2,000,000 sale.

Miami-Dade charges 60 cents per $100, and on anything other than a single-family residence it adds a discretionary surtax of 45 cents per $100 (Fla. Stat. §§ 201.02(1)(a), 201.031). A commercial sale is not a single-family residence, so both apply: $12,000 plus $9,000 on a $2,000,000 sale. The doc stamp calculator gives the figure for any price and county.

Who pays the stamps, the premium and the rest is whatever the contract says. Commercial contracts are negotiated, and the custom that decides it on a house often does not apply.

Which policy, and which endorsements?

We issue owner's and loan policies on ALTA forms as an agent for First American, including leasehold coverage where the interest being insured is a ground lease rather than the fee.

The lender's closing instructions name the endorsements it requires, commonly on zoning, access, contiguity of parcels, the survey and the tax parcel. Each one is issued only where the facts of the file support it, and the underwriter decides that. We read the list against the file early, because an endorsement the facts will not support is a conversation to have with the lender weeks before closing, not the day of it.

What does the search cover?

The land, and every party to the deal. On the land: the chain of title, mortgages, easements, restrictions, recorded leases and memoranda of lease, taxes and assessments, and code and permit matters. On the parties: judgments, liens and UCC filings against the selling and buying entities and their principals.

A recorded problem is sent to you in writing with what clearing it takes. The ones we see most often on commercial files have their own pages:

• The contract isn't the standard form. What does that change at closing?
• The property has no legal access. Can it still close?
• We're buying from a bankruptcy estate. What does the title work need?

What to send us first

Three things decide whether a commercial closing holds its date, and all three can be started the day the contract is signed:

1. The entity names and documents. The full legal name of every entity on both sides, and the documents that show who may sign: articles, operating agreement or bylaws, and the resolution or consent authorizing this deal.
2. The estoppels. Tenant estoppel certificates on a leased property, and association estoppels where the property is in one. They take the longest to come back.
3. The lender's requirements. The title requirements and the endorsement list, so the commitment is written to them the first time.

A sale that is one half of a like-kind exchange needs the qualified intermediary in place before it closes. The closing side of that is in the Florida 1031 exchange closing guide.

When should an attorney be involved?

On almost every commercial deal, and certainly where the contract, the leases or the loan documents are being negotiated. We close to the documents the parties' lawyers settle; we do not draft them or advise on their terms.

Common questions

Is title insurance more expensive on a commercial property?

Not per dollar of coverage. The premium comes from the same promulgated schedule as a house; a commercial premium is higher because the price is. Endorsements, the search and the settlement fee are where a commercial file costs more, because there is more of each.

Can you close where the buyer is an LLC formed for the deal?

Yes. Send the articles and the operating agreement as soon as the entity exists, so its authority is settled before the commitment is final rather than at the signing.

Do you handle the closing for a 1031 exchange?

Yes, alongside whichever qualified intermediary the investor chooses. Whether to exchange, and whether the property qualifies, is for the investor's CPA or tax counsel.

How do I get a quote?

Request a quote with the price, the loan amount and the county, or upload the contract and we reply with every line itemized, our fees included.