Nov 21, 2023 6 Min read
Commercial real estate investing can be a lucrative venture, but it also comes with its share of risks and legal complexities. One aspect that investors must navigate is the concept of commercial liens. In this blog, we will delve into what commercial liens are, how they function, and most importantly, how they impact commercial real estate investors.
A lien is a legal claim or right against a property as security for the payment of a debt or other obligation. Commercial liens, specifically, are liens placed on commercial properties, such as office buildings, retail spaces, or industrial complexes. They arise when a creditor, typically a lender, has a legal claim against the property due to a debt owed by the property owner.
Commercial liens are created when a creditor files a lien against a property with the appropriate government authority, usually the county recorder's office. The creditor becomes the lienholder, and the lien is recorded as a public document. This public record serves to notify other potential creditors, buyers, or interested parties about the existence of the lien.
The lien attaches to the property, rather than the property owner, meaning it remains in effect even if the property is sold or transferred to a new owner. In essence, commercial liens encumber the property, restricting the owner's ability to sell or refinance it without satisfying the debt or obtaining lien release from the creditor.
Commercial liens are an important aspect of commercial real estate investing that demands attention and thorough understanding. They can significantly impact financing options, property sales, and overall investment strategies. By conducting due diligence, working closely with legal professionals, and understanding the implications of liens, commercial real estate investors can navigate these complexities more effectively and mitigate potential risks.
When wanting to cover all bases when investing in commercial real estate, it is important to enlist the right partners such as Terrydale Capital. Our team has the collective experience and expertise to guide you through the investing process and help you get connected to the right parties to satisfy all facets of your investment. Contact us today.
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