Common Mississippi Real Estate Title and Deed Issues

From easements and liens to illegal deeds and heirs suddenly appearing, a variety of title and deed issues can affect those involved with commercial real estate transactions in Mississippi.

Title issues or “defects” refer to any problems that arise concerning the legal ownership of a property.

Understanding the most common title and deed issues in commercial real estate transactions can help you prepare for potential problems, protect your investment and your business, and prevent legal disputes from negatively impacting your project.

The types of title and deed issues we see most commonly in commercial real estate are:

• Illegal deeds: If previous property transfers have been carried out without the proper legal authority, ownership rights may be affected, and you should seek legal advice.
• Forgeries/fraud: If documents have been forged in previous property transactions or other fraudulent activity has occurred, the question of the property’s title may not be clear.
• Public records errors: Sometimes, errors from officials when documenting property transfers raise unwanted questions and confusion over ownership.
• Unidentified liens: If a previous owner left unpaid taxes or other unidentified debts at the time of purchase, the title may be affected and present legal problems for the current owner.
• Boundary disputes: These often occur when property lines are unclear, leading to conflicts over land use, often resulting in costly legal battles.
• Undisclosed easements: Legal rights that allow others to use a specific part of your property for a specific purpose might not be recorded and can subsequently impact your business’s use or development of the property.
• Unidentified heirs or undiscovered wills: If heirs of previous owners of the property suddenly appear and claim rights to it or a new will comes to light, a legal dispute may result.
• Zoning laws: If the property you purchase isn’t zoned for the usage you intend, legal problems, losses or a change of business strategy may result. This should be thoroughly checked before the transaction is confirmed.

Some of the most common title issues are beyond your control. However, the risks presented by most issues can be reduced by exercising due care and attention during the purchase process. Several issues are difficult to uncover without the help of a local attorney familiar with the common challenges of commercial real estate law in Mississippi.

Commercial property deeds in Mississippi can take several forms. It helps to understand which type will best protect your investment. Generally, in commercial real estate transactions, two types of deeds dominate:

1. Warranty deed: This guarantees that the seller holds a valid title free from any encumbrances and ensures the grantor will defend the title against any future claims. Because of the protections and security this type of deed provides, it is the most popular type used in commercial real estate deals in Mississippi.
2. Special warranty deed: This warrants only against title defects that occurred during the seller’s ownership, with a much more limited scope than a standard warranty deed.

Two other recognized types of deeds in Mississippi to be aware of are:

1. Quitclaim deed: This type of deed transfers whatever interest the grantor currently has, but with no guarantee that the title is good, free of liens or even valid. It is rarely used in commercial property transactions because of the lack of protection provided—although intrafamily deals may employ it if trust levels are high.
2. Transfer on death deed: Although rarely used in commercial real estate, a transfer on death deed allows a property owner to transfer the title to a beneficiary upon death without probate (simplifying the property transfer process during estate planning but not offering the robust protections of a warranty deed).

Any party looking to purchase commercial real estate in Mississippi should follow some recommended steps to protect their investment from the most common title and deed issues.

Firstly, conduct a comprehensive title search of the public records. These records should detail the ownership history of the property and verify that the seller owns the property, while also identifying any existing claims, liens, other defects, or encumbrances.

If you work with a commercial real estate attorney, the title search will be thorough, and you can benefit from a professional assessment of any red flags. Working with your commercial real estate lawyer, the results of the search can be processed and a title opinion provided, detailing any associated risks with purchasing the property—and how to address them.

It is also advisable to purchase title insurance if you decide to proceed with the purchase. This will safeguard you against financial loss from most title defects that were undetected during the title search. Title insurance is a one-time cost based on the property’s purchase value—and it is usually worth paying this price for the extra peace of mind it provides (more about this below).

Mississippi real estate law requires deeds to be formatted correctly, signed by all relevant parties, and notarized to be legally valid. Only then is the deed considered properly executed.

You can ensure compliance with all requirements under Mississippi law and rest easy that your interests are protected by working with a local, suitably qualified commercial real estate attorney.

What do you do if the title of the property you purchased has defects?

Commercial property insurance only protects the physical structure of a property. On the other hand, title insurance can help you address title defects and ownership disputes without incurring significant financial losses—for instance, from the legal costs of defending a claim.

If you purchased title insurance as a property owner, as recommended, you may be protected against all of the potential title-related issues outlined above, e.g., fraud, liens, public records errors, etc. If you did not purchase title insurance, speak to a commercial real estate lawyer to understand your legal options.

Commercial real estate transactions are often high stakes due to the significant investments involved. Legal challenges can cause significant delays and complications with commercial projects, especially if the title has defects.

To protect yourself and your business, consult with an experienced real estate attorney familiar with the common title and deed issues in Mississippi real estate transactions.

For legal advice and assistance with a commercial property title or deed issue anywhere in the Gulf Coast of Mississippi, contact our skilled attorneys at Rushing & Guice, PLLC.