Title Searches:
How to Avoid Owning Someone Else’s Problems in Commercial Real Estate

By: Lindsey Abboushi- North Carolina Licensed Attorney with Brownlee Whitlow & Praet, PLLC

 
      In commercial real estate, due diligence isn’t just a box to check—it’s the difference between a smart investment and a potential financial disaster. Before you get too attached to that shiny community or retail space, there’ are several key steps that can save you from inheriting someone else’s legal problems but the most significant is: the title search.

    Think of a title search like investigating the history of a property. It’s not as exciting as binge-watching a true crime series, but it can reveal some shocking twists—like unpaid property taxes, boundary disputes, easements, or zoning restrictions that could derail your business plans. Skipping it is like spinning the roulette wheel on your investment: you might land on smooth sailing, or you might hit double zero and walk away with a handful of legal and financial problems.

What’s a Title Search, and Why Should Commercial Buyers Care?

    A title search is like a deep dive into a property’s past—a thorough investigation of public records to ensure the property is free of legal baggage. This process confirms the seller’s legal right to transfer ownership and helps identify any issues that could complicate your plans. If it sounds tedious, that’s because it is—but it’s also incredibly important!

    Here’s why commercial buyers should pay extra close attention: commercial properties are more complex than residential ones. Unlike a single-family home with a clean chain of ownership, of usually only individual owners, commercial properties often have a long, tangled history, between individual owners and various entities. They may have been owned by multiple parties, used for different purposes, or burdened with easements, encroachments, and other legal traits that can affect how you use, or profit from, the property.

    Imagine buying an industrial warehouse only to discover the previous owner failed to pay their contractors, and now there are multiple liens on the property. Even worse, what if you planned to open a retail space, only to find out it’s still zoned for agricultural use! Without a title search, you might not find out until after the ink is dry on the closing documents, and by then, it’s too late and is now your problem.

    The good news is that a title search can prevent these nightmares. Title professionals comb through deeds, tax records, zoning documents, and other court and governmental filings to uncover potential red flags. They ensure that when you buy a commercial property, you’re getting what you think you’re getting—nothing more, nothing less, and certainly no hidden surprises.

What Does a Title Search Look Like in Commercial Deals?

    A commercial title search dives deeper than the residential kind and can reveal:

• • • • Liens: Unpaid property taxes or contractor fees can lead to liens on the property. If you buy without resolving them, those debts become your problem.
      • Easements: Utility companies, neighboring properties, or even local governments might have legal rights to use or build on part of your property.
      • Zoning Issues: Are you planning to build a luxury hotel? Storage center? Gas station? Multifamily housing? Just make sure the property is actually zoned for accommodating that use, or be aware that you or the seller as part of the closing process may need to change the use.
      • Boundary Disputes: The neighboring property might be encroaching on the land you’re about to buy—or vice versa.
      • Environmental Restrictions: If the property is in a protected area or has a history of environmental contamination, there could be major limitations on its use.
        
        

Who Performs the Title Search?

     The good news is you won’t be sifting through old courthouse records yourself. Title searches are typically conducted by:

• • • • Title companies specializing in commercial real estate
      • Real estate attorneys (hi there!)
        
        

     These professionals are trained to spot issues that could jeopardize your investment. They’ll comb through deeds, tax records, zoning documents, and court filings to make sure that the property’s title is clean.

What Happens If the Title Search Finds Problems?

      It’s not uncommon for a title search to uncover issues, especially with commercial properties that have changed hands multiple times or been around for decades.  Don’t panic, we are here to help!

      Many problems can be resolved:

• • • • Liens: Sellers usually pay off outstanding debts before closing.
      • Zoning or Use Restrictions: You may be able to apply for a variance, change of use, or work with local authorities to resolve conflicts.
      • Boundary Disputes: A professional surveyor can clarify property lines and settle disagreements.

      In extreme cases, if the title issues are too big to handle, you can renegotiate—or even walk away from the deal.

Title Insurance: Your Secret Weapon

      After the title search is complete, you’ll want title insurance to protect your investment and most lenders require it.
Think of it like car insurance for your property, you want to have it but hopefully you don’t need to use it.

The two types of policies are:

• • • • Owner’s Policy: Protects your ownership interest and covers you if a hidden issue pops up later.
        Lender’s Policy: If you’re financing the property, your lender will insist on this to protect their investment.

*A more in-depth blog about how to read these policies can be found here. 

In Conclusion: Do Your Homework and Hire the Right Team

      In the world of commercial real estate, knowledge is power, and a title search is one of your first lines of defense. It
ensures that the property you’re investing in is exactly what it appears to be, without any hidden legal or financial surprises.

      Want to talk about your next commercial property acquisition? Our real estate department is here to help!

     
*The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information in this article is for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information. Viewers of this material should contact their attorney to obtain advice with respect to any particular legal matter. No viewer of this material should act or refrain from acting on the basis of information in this presentation without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.  Use of, and access to, this article does not create an attorney-client relationship between the reader and Brownlee Whitlow & Praet, PLLC or any contributing law firms. All liability with respect to actions taken or not taken based on the contents of this article are hereby expressly disclaimed.