Missing warranties
With a number of large commercial portfolios being sold out of administration buyers are starting to look for funding in order to acquire these 'distressed' assets. Unfortunately, these portfolios are often being acquired without the benefit of warranties from the seller i.e. the administrator, which can create difficulties with the bank credit committees and legal departments as many of the reps and warranties provided for normal property lending are not present.
A warranty replacement policy from First Title is an effective risk management tool that can be used to replace some, or all, of the most common real estate warranties and enable the administrators to sell the portfolio. The banks' credit committees will be confident they are adequately protected, if, for example, it can be shown that that the administrators did not have the ability to sell the land. The premium for a policy such as this is deemed to be an allowable expense so there is no cost to the mortgagee for taking this protection.