Learn from the experts why you NEED to have Title Insurance for your business or commercial real estate transaction.
We sat down with our CREC Directory Partner, Vantage Point Title, who are a Nationwide Title and Escrow Company, that are very experienced in the cannabis industry niche nuances.
Watch the interview below to better understand how title insurance is essential for assisting the entire Loan Closing process for a range of products from the standard “Alta” to “Short form”; Property reports, Tax Verification, Full Title curative, and complete Closing / Settlement and Escrow services.
Steve Medendorp, Esq. SVP – Corporate General Counsel & National Sales at Vantage Point Title explains his perspective on the cannabis space from in-depth experience since 2017 with Vantage and why he is not just your Title Partner, but your Business Partner.
The interview recording and transcript are featured below, as well as a full educational summary, to help you understand the nuances within the cannabis industry and prepare for your title insurance usage in the future.
Reach out to Steve with questions about title insurance for cannabis at the bottom of this article.
VIDEO INTERVIEW – Steve Medendorp, Vantage Point Title
VIDEO TRANSCRIPT – Steve Medendorp, Vantage Point Title Company for Cannabis
Vantage Point Title is a national title company for real estate transactions. We’re one of the largest independent title companies in the nation. We service every state, but Hawaii. And in the cannabis industry, we service every state that cannabis has legalized.
Simply it is an insurance policy that you would acquire, much like you would do, let’s say, if you were to buy in a house that tells you that the real estate you’re acquiring is protected, it is owned by, and will be owned by you. So ultimately that’s the easiest way to explain it. It’s an assurance that the real estate is yours and ultimately is what you mean to buy.
Is Title Insurance a Requirement?
It’s not a requirement. However, I would highly recommend as much of the industry does to anybody who does a real estate transaction. Say you are buying your own house, would you wanna make sure that you own the proper property for your own house? A similar situation would be with the cannabis industry, for instance, where if you’re buying a parcel and it’s gonna be your main either grow facility or even a retail facility, you wanna make sure you actually own that property and not the previous owner come back to you and say sorry, but you, you don’t own it.
As a title insurance company, what we do is we provide title insurance as well as escrow services. So we provide the entire closing process for you. Now, we work hand in hand with lenders. We work hand in hand with the buyers, the sellers, the real estate agents developers, if it’s something that needs to be developed.
So we work with all the parties and we are basically the intermediary or the party that works in between and works with all the parties to work to get the deal closed. We work with all the parties. So whether we deal with the banks, the lenders, the title insurance other title insurance companies attorneys, we work with each party to make sure and ensure that we service all sides to make sure a transaction is closed.
In title insurance, we not only do the title insurance aspect of it and provide that insurance, but we also provide the escrow and closing services associated. As cannabis is, has its own rules and regulations, as I’m sure everybody’s aware of in the industry. But when it comes to title insurance, there are additional regulations and rules, not a lot of title underwriters.
It wasn’t until a few years ago that title insurance actually became something that was feasible for the cannabis industry. There was a lot of pushback, and there still is in today’s world. In fact, the largest underwriters still do not like to issue title insurance. Now we are in a unique situation where we’re working closely with a national underwriter that does title insurance.
They’ve finally come across and we’ve done a lot of pushing and prodding. It’s because we are their largest title agency in the nation, that they’ve actually started to take a listen to what we’re saying, and I think they also realize that we’ve had to, by way of necessity over the years, now use smaller title insurance underwriters for cannabis transactions.
Now they’re looking at this saying, saying this is more mainstream. We’re prepared to jump in, and that’s why we’re very excited about the opportunities that we can provide our clients, whether that’s our buyers or sellers the real estate brokers in general. We’re out there trying to tell the world right now.
When Do You Use Title Insurance in the Transaction?
We come in at the, I wouldn’t say at near the end of the transaction, but close to end. If you think of it this way, a buyer is looking to buy real estate or sell real estate, however that may be. There are typically first looking. Finding that the ideal buyer seller, once they find that buyer seller and they have a contract, that’s when a title insurance company typically comes into play because they are the party that helps facilitate this transaction.
We, in the interim as well, not only do we provide the facilitations of the transaction to closing and where we actually have people who come there and do the closings, but we obviously have provide the title insurance policies themselves as well, and we’ll record all the necessary documents for the transaction.
We’ve even gone so far as when it is a business transaction that includes real estate to hold escrows for the business to end of that transaction as well as we’ve done the closing on the real estate portion. And what I mean by that is there may be an element of $10 million real estate transaction, but the business itself is worth a hundred million dollars.
In that particular case, we’ll hold a hundred million in escrow of which the 10 million would be tied to the sale of the real estate portion. So in certain states there are different rules and regulations not necessarily set in stone, not necessarily legislative or legal requirements, but those of customary use.
So what I mean by that is in certain areas, a buyer would select the title insurance company because they are the ones paying for the title insurance policy. Whereas in other areas, the seller selects it and the seller’s the one ultimately paying for those.
Scenario 1 for Title Insurance
First and foremost, the scenario I can give you is one that I’ve as an attorney and a practicing attorney, I’ve run into already, unfortunately, and not personally, however, with one of my clients.
And that is that this was a development, the developer or the builder built on a lot that ultimately we get to closing. And come to find out, he built it on the neighbor’s lot. And so in that particular circumstance, the builder’s A, technically in trespass, and B, the builder is scrambling to figure out what to do.
Now, had he had not gone through and gotten title insurance, this would’ve been a situation where he’s out of luck unless he can figure out a way to solve this solution or solve this issue with whoever the owners of that other property are in this particular case. We found it by the time we got to the title company, the title company located and found out the issues right of way associated with it.
So before it got all the way to the end, the builder was informed the fact that they were in the wrong position. Now from a legal perspective, that resulted in us having to obtain a settlement with the previous or the owners of the neighboring property, which was luckily enough ready to go. Other scenarios are such.
Scenario 2 for Title Insurance
We have title insurance rules, regulations, but there’s also exceptions to title insurance policies. And I find that a lot more prevalent in the commercial as well as the cannabis world, in which there are exceptions that are put on these title insurance policies, essentially accepting out of a certain title coverage.
And so what becomes critical then is do you have a title company and the people associated with the transaction? Be knowledgeable about what is and what is not requirements or exceptions that you would find that that became an issue. And, and what I mean by that is a prime example is if there’s environmental issues or if there’s issues associated with a survey that don’t allow for.
A cannabis facility, for instance, to be put on a piece of property. There’s no use in buying that property unless you’re knowledgeable enough to know, Hey, wait, yes, I’m gonna get a policy and I’m, yes, I’m gonna buy this property, but if I can’t get it past the title insurance, if I can’t get it past the zoning side of it then, or a conditional use side of it, then I have an issue there where I own a piece of property that’s not gonna be useful to me.
So those are all things that we work hand in hand with buyers and sellers on to make sure that we get a transaction that closes.
Scenario 3 for Title Insurance
Third scenario would be it. It ties closely into what we had discussed earlier, but with within the cannabis space specifically, there are a lot of exceptions that we wanna make sure are cleared.
And, and those exceptions are not necessarily always about. The real estate side of it in terms of what you can or can’t do with the real estate property, but more with regard to the future uses of it. Because not every cannabis business instead is gonna stay as a cannabis business. And so what we wanna do is make sure that when you get a title insurance policy, you have the best and cleanest policy that you have available.
Not only for Euro intended use of it, but any sort of future intended use. What you’ll find in this industry is that a lot of people, Piggyback off of a previous title insurance policy, and if you’re not careful, sometimes those get pigeonholed so much that you get into only a certain kind of conditional uses or uses that are allowed when that shouldn’t be the case normally.
So again, in the commercial and the cannabis space, that becomes a little bit more critical and we look at that quite closely to make sure that we try to make sure that whoever is acquiring this property still has the ability and the uses available to not only today, use it for cannabis, but maybe at some point in the future use it for some alternative.
Why Vantage Point Title?
I think really from our perspective as vantage point title, what we puts us ahead of a lot of our competition is the fact that we actually use multiple underwriters. And again, we’re talking specifically in the cannabis space. In, in our normal day-to-day operations, we have five underwriters that we use.
And that gives us an opportunity to, to really write title for a lot of different policies, for a lot of different types of policies. Everything from. Mineral interest to residential to multi-family too, as we know, as in the cannabis space. In the cannabis space alone. What also puts us a little bit ahead of our competition is the fact that we have multiple underwriters there as well.
We in fact, have two underwriters that we use, and so what that does is it offers our clients. The ability to have multiple underwriters. That also offers our clients the ability for us to be able to pit one underwriter against the edge other so that we can find and make sure that we give the cleanest policies to our under to our clients.
It also then enforces the ability for us to say, Hey, We’ll get this thing done one way or the other. You know, we have one massive underwriter who can go to any other state, any state that cannabis is legal in. The other one has a few more limitations, but has a quicker, much more nimble ability and approach to it.
How Long Does Title Insurance Take to Close?
In general, though, still we are seeing and are able to close some of these transactions in less than 30 days. Many times it’s really up to the buyers, the sellers and or the lenders to the extent that they are prepared to close because we can typically close these and do searches and do everything we need to do.
30 day period, which is what you see typically as an attorney who practices here in the state of Florida. As a national title company, we see these transactions, we see issues all day long, and unfortunately what that means is somebody may have an issue on title insurance and if you don’t have it, it’s gonna be a situation where you may be losing that.
Value of the property, or you may not even own that property, of which you just put millions of dollars in upgrades and updates into. So as much as of a necessary evil as it is, it’s a small expenditure in the grand scheme of your purchase and sale. So I’d highly recommend that you go ahead and get that title insurance.
Even though historically in the cannabis space, it’s been a lot less. Probably because there wasn’t an ability to have insurance. But in today’s world, in the cannabis world, we now have title insurance for you. So we’d love to have an opportunity to take that and, and show you guys what we can do.
Ask Vantage Point Title and Steve More Questions on Title Insurance
Vantage point Title is a national title insurance company. We have the ability to close in any state except for Hawaii. We have the ability to close in the, in anywhere, and we can close multi-state, multi-national companies where we’re doing closings physically in other countries and we, we have the capabilities of doing this and we would love your business.