Avoiding Title Insurance Pitfalls In Portfolio Transactions

In commercial real estate finance transactions involving a portfolio of properties located in multiple states, lenders must consider certain title insurance issues unique to such transactions. Lenders will need to request specific types of coverage and be cognizant of certain state-specific and timing issues that are often associated with large portfolio transactions.

In the context of a single property transaction, a lender would generally obtain a single loan policy for the full amount of the loan. In portfolio transactions, there are typically multiple mortgages which secure the full amount of the loan which raises an additional set of issues. First, it is unwieldy to include multiple properties on the same loan policy, especially as the number of sites increases. Second, while a mortgage might secure the full loan amount in jurisdictions where there is no mortgage tax, multiple policies cannot be issued with coverage equal to the full loan amount for each