Title Defects in Commercial Real Estate: How to Resolve Them Before Closing

When you’re buying or selling commercial property, everything can seem on track — until a title defect comes up. Suddenly, what should be a straightforward closing becomes a delay or even a dealbreaker.

For business owners and investors, title defects are more than paperwork problems. They can affect ownership rights, financing, and the marketability of the property. Understanding how to identify and resolve these issues early is key to protecting your investment and keeping your deal on schedule.

What Is a Title Defect in Commercial Real Estate?

A title defect is any issue in the ownership record of a property that could affect your right to use, sell, or finance it. In Florida, this can include:

• Unreleased Liens or Mortgages: When prior debts tied to the property haven’t been cleared.
• Errors in Legal Descriptions: Small recording mistakes that create uncertainty about what land is actually included.
• Undisclosed Easements or Encroachments: For example, when another party has access rights to part of your land that weren’t properly documented.
• Ownership Disputes: Claims from heirs, ex-partners, or former owners.
• Judgments or Tax Liens: Debts that can attach to the property even if you didn’t incur them.

These issues can prevent title insurers from issuing a “clear title” policy,  a must-have before any closing in a commercial transaction.

How to Identify Title Defects Before Closing

1. Conduct a Comprehensive Title Search: A title search reviews public records to verify ownership history and identify any encumbrances. Your real estate attorney or title company will handle this, but it’s critical to ensure it’s done early in the due diligence process, not right before closing.
2. Review the Title Commitment Carefully: The title commitment lists exceptions to the policy, meaning issues the title insurer won’t cover. Common exceptions include utility easements or restrictive covenants. Your attorney can negotiate with the title company or work to remove unnecessary exceptions that could impact the property’s value or use.
3. Obtain a Survey and Compare It to the Legal Description: A survey helps identify boundary issues, encroachments, or easements that may not be visible in public records. Comparing it to the deed’s legal description ensures consistency; a mismatch here is a red flag for potential title disputes.

Common Title Defects and How to Resolve Them

Unreleased Mortgages or Liens: If prior loans were paid but not officially released, your attorney can request payoff letters or lien releases and record them properly with the county.

Errors in the Chain of Title: Clerical errors in deeds or missing signatures can often be corrected with a corrective deed or quiet title action.

Ownership or Heirship Disputes: If another party claims ownership, your attorney may negotiate a release, obtain a quitclaim deed, or pursue court action to clear the title.

Boundary Disputes or Encroachments: These can often be resolved through boundary line agreements or easement adjustments, but they must be documented and recorded properly before closing.

What Happens if a Title Defect Is Found After Closing?

If a defect surfaces after closing, it can create serious problems. For example, if a prior lienholder asserts a claim, you may have to pay the lien to protect your ownership. This is why title insurance is critical, it covers financial losses resulting from undiscovered title defects.

However, title insurance doesn’t solve every problem automatically. Many disputes still require negotiation or litigation to resolve. That’s where having an experienced real estate litigation attorney becomes essential.

Why You Need an Attorney for Title Defect Resolution

While title companies handle searches and insurance, they do not represent your legal interests. Only an attorney can:

• Review the title commitment and identify hidden risks.
• Negotiate with lenders, sellers, or other parties to clear title issues.
• File corrective documents or court actions when needed.
• Ensure compliance with Florida’s property and recording laws.

At Ayala Law, our attorneys regularly assist clients in resolving title defects in commercial real estate transactions across Florida. From minor recording errors to complex multi-party disputes, we help clients clear title efficiently so they can move forward with confidence.

Final Thoughts

Title defects can derail even the most carefully planned commercial deals. By identifying and addressing title defects early and working with a law firm experienced in both real estate litigation and transactions, you can protect your investment and avoid unnecessary delays at closing. Our attorneys can review your title documents, identify potential risks, and help you resolve them before they become costly problems.

If you’re facing a title issues or preparing for a commercial closing, contact one of our experienced business litigation attorneys in Miami at 305-570-2208.

You can also reach out directly to our founding attorney, Eduardo A. Maura, Esq., at eduardo@ayalalawpa.com.

Schedule a confidential case evaluation with Ayala Law online here.

[The opinions in this blog are not intended to be legal advice. You should consult with an attorney about the particulars of your case.]