USA – NORTH CAROLINA Law and Practice Contributed by: John Livingston and Brittani Miller, Kilpatrick Townsend & Stockton LLP
• Riparian or water rights: Rights to use water sources near or flowing through a property. 2.2 Laws Applicable to Transfer of Title The laws that apply to the transfer of title of real estate include recording laws which mandate whether and how deeds should be recorded in local land records to establish public notice of ownership and determine priority in competing claims. In determining priority between competing claims, North Carolina is a race state, meaning priority is given to the first party to record a valid claim with respect to the applicable property. Local laws also define the format for, and information required to be included in, deeds, memo - randa of agreements, deeds of trust and other record - ed documents. Additionally, tax laws play a role in the transfer pro - cess, requiring property or transfer taxes to be paid or waived where appropriate to complete the transaction legally. All transfers of real property in North Carolina are subject to an excise tax payable at the time of recording the deed for the transfer other than trans - fers made for the following statutory exemptions: (i) by operation of law; (ii) by lease for a term of years; (iii) by or pursuant to the provisions of a will; (iv) by intestacy; (v) by gift; (vi) if no consideration in property or money is due or paid by the transferee to the transferor; (vii) by merger, conversion or consolidation; and (viii) by an instrument securing indebtedness (N.C. Gen. Stat. § 105-228.28 et seq (2026)). The excise tax is charged at a rate of USD1 per USD500 of value of the property. Additionally, the following seven of North Carolina’s 100 counties impose a local transfer tax of up to 1% of the value of the property: Camden, Chowan, Curri - tuck, Dare, Pasquotank, Perquimans and Washington Counties. 2.3 Effecting Lawful and Proper Transfer of Title A transfer of title to real estate occurs through the execution and delivery of a deed by the seller to the buyer. The deed, which must meet specific legal requirements outlined by North Carolina law, serves as the legal instrument that transfers ownership of the property. To make the transfer effective against third parties and ensure public notice of the new owner -
ship, the deed must be recorded in the county record - er’s office. Title insurance (both for owners and lenders) is com -
mon in real estate transactions. 2.4 Real Estate Due Diligence
Real estate due diligence often begins with a title search of the subject property to verify ownership, review documents affecting the property and iden - tify any encumbrances, such as liens, easements or restrictions, that could affect the property. Addition - ally, surveys should be obtained to confirm the prop - erty’s boundary lines and identify potential disputes. Physical inspections may be conducted to assess the condition of the property, including structural integrity, environmental concerns and compliance with build - ing codes. Buyers may also review zoning laws and land use regulations to ensure the property can be used for their intended purpose. Buyers of commercial property should also conduct a Phase I Environmental Site Assessment. Additional diligence may be needed based on the proposed use of the property. 2.5 Typical Representations and Warranties Typical seller representations and warranties include assurances regarding title to the property, compli - ance with zoning and environmental regulations and absence of liens or encumbrances. Buyers typically rely on performing their own due diligence, including inspections and environmental assessments, to verify the condition of the property. Remedies for misrep - resentation include termination of the contract and claims for damages. Seller representations and war - ranties typically survive closing for a limited period, with common survival periods ranging from six to 12 months. It is also customary to include a cap on the seller’s liability for breaches. For residential transactions, a statutorily mandated disclosure form is required prior to executing an offer to purchase. The North Carolina Real Estate Com - mission’s form of disclosure is available online (North Carolina Real Estate Commission, Residential Prop - erty and Owners’ Association Disclosure Statement). 2.6 Important Areas of Law for Investors An investor should consider the following areas of law.
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