Why have a Survey?
The number of residential property sales exploded over the past few years, but the hot real estate market may have driven at least one unexpected consequence when it comes to surveys. Amid the highly competitive market, some home buyers may have been told that it would take longer to close a transaction since surveyors were overwhelmed with numerous orders. Thus, some buyers elected to waive surveys. After purchasing the property, however, buyers may have discovered encroachment matters impacting their property or their neighbor’s property, or that a boundary line is in a different location than originally believed.
Every year the claims team receives several notices involving survey matters and boundary disputes. Here are a few scenarios that serve as a reminder about the importance of surveys, and what you can do when a transaction does, or does not, include a survey.
Scenario One: A new buyer does not obtain a survey at closing. She is visited by her neighbor a few days after purchasing the property. The new property owner believes it’s going to be a friendly visit but instead the neighbor says, “your driveway and garage are encroaching on my property, and we want it removed in 30 days or else you will be hearing from our attorney.”
Typically, such an encroachment would have been shown in a survey. Further, the title policy may not offer much relief to the beleaguered buyer in such a case.
A title policy will likely have reflected a standard survey exception in Schedule B which may read, “Any discrepancies, conflicts, or shortage in area or boundary lines, or any encroachments or protrusions, or any overlapping of improvements that would be disclosed by an inspection or an accurate and complete land survey of the Land.” Since a survey was not obtained in this scenario, this may result in the matter not being covered under the title policy.
Scenario Two: This next situation involves a seller who owns a large tract of land and decides to split the tract into three smaller lots. The seller only wants to sell and convey one of the smaller, unplatted lots. The legal description in the seller’s deed is for the entire larger tract. How will the parties determine which of the three tracks is to be sold and properly identify the location of the property and its legal description to include in the deed? The purchase agreement most likely is not clear and will require additional questions and written clarification between the agent and the parties as to what is intended to be conveyed in the transaction. Unfortunately, without clarification in such cases, the parties may eventually find themselves in an expensive lawsuit.
In either scenario, if a survey is not requested and purchased at the time of closing, it is a good practice to have the buyer sign a document that the party understands a new survey is being declined, and to keep the document in the closing file. On the other hand, if a survey is obtained ahead of closing the transaction, consider the following:
- Review the survey for accuracy of the survey and the survey certification. Are the correct parties identified? Review the legal description. Do you have a signed and dated survey from the surveyor?
- Carefully review the survey to locate any items beyond the boundary lines or encroaching onto the buyer’s property.
- Add any specific survey matters which are reflected on the survey as exceptions in the title commitment.
- Provide a copy of the survey to the buyer (and lender, if appropriate).
- As a good practice, have the buyer acknowledge receipt of the survey by having the buyer sign and date either the survey or a separate document confirming receipt, and keep a copy in the closing file.
Also, in certain jurisdictions, Survey Coverage or Survey Endorsement may be available for purchase to add coverage to an Owner’s or Loan Policy. If permitted in your jurisdiction to rely on a prior survey and an affidavit, discuss such a situation and the requirements with the Alliant National underwriting team before the closing occurs.
We understand not every case requires a new survey, but a buyer may find that a survey provides an understanding of what was conveyed and some peace of mind regarding their investment.
If you have questions, please contact the Alliant National claims team.
Resources:
2021 American Land Title Association/National Society of Professional Surveyors (ALTA/NSPS) Standards: https://www.nsps.us.com/page/2021ALTA.
American Land Title Association (ALTA): Frequently Asked Questions and other guidance for ALTA/NSPS Land Title Surveys: www.alta.org.
Tags: land surveys, property deed, real estate, title insurance