When purchasing a home, there are countless details to consider, from negotiating the price to securing financing. Amid all this, one critical step often gets overlooked: obtaining a property survey. While it may seem like an optional expense, don’t risk waiving a property survey because it can leave buyers vulnerable to unexpected and costly issues after closing.
Importance of Surveys
Surveys can provide critical information about a property about to be sold or mortgaged. Protect Buyers from unpleasant post-closing surprises by making sure they understand the risks of foregoing a survey and when a survey is obtained, by carefully reviewing the survey.
Lender Survey Requirements
While most mortgage lenders no longer per se require a survey, they may require the exclusion of the survey exception from the final loan policy, which for some transactions may mean a survey is needed, or they may require certain endorsements with underwriting standards that include needing a survey.
Value of Survey to Buyers
A Buyer should not think a survey is not needed just because their lender does not require one. The coverage for matters that may be impacted by a survey is different in a loan policy than in an owner’s policy. Title insurers may allow a survey exception to be removed from a loan policy for transactions that meet specified requirements, but standard owner’s title policies in most states have a survey exception and thus do not cover, any title issues, facts or matters that would have been shown by an “accurate and complete land survey of the Land.”
Risk of Waiving a Survey
Buyers need to understand that there is a risk associated with waiving the survey. Without a survey, Buyers run the risk that the boundary lines may not be where they thought they were or were told they were, that there is an encroachment of one of their improvements onto a neighbor’s property or a neighbor’s improvement encroaching on their property, that there is an unacceptable encroachment into an easement area, that there is a violation of a restriction line, or that there is some other condition impacting the title to the property that a survey would reveal. There are even situations where a survey could reveal that the property being conveyed is not the one the Buyers thought they were buying. These issues can be very costly to resolve or can result in the property being worth considerably less than the price paid for it. The agent or attorney handling the settlement needs to make sure that a Buyer choosing not to obtain a survey understands the risk they would take on by doing so.
If you review property surveys, here’s a checklist of the essential items:
- Confirm that the property shown on the survey matches the property described in the title deed. For a property in a platted subdivision, compare subdivision name and lot, block, section, phase and parcel designation to make sure they match and that there is no gap in the description (i.e., parcel does not close). For a property with a metes and bounds description, make sure the calls (directions, angles and distances) match.
- Ensure that the amount of square feet or acreage mentioned in the deed matches that shown on the survey. Also compare it to the info in the tax assessment records for the property.
- If the property is comprised of more than one lot or parcel, are they contiguous? It may be difficult from the description alone to catch that the pots or parcels are not contiguous, but a survey will show that.
- Are there any improvements (property owner’s or neighbor’s) that encroach across a boundary line?
- Do the improvements encroach into any easement areas or rights-of-way?
- If there is a fence shown on the survey, does it belong to the subject premises or the neighbor’s premises? If the fence belongs to the subject premises, is it on the property line, inside the property line, or over the property line onto a neighbor’s property? If it is the neighbor’s fence, does it encroach onto the subject property? Also, if the fence is not on the boundary line, the status of title to the land lying between the fence line and the property line needs to be determined.
- Does the survey show in the drawing or indicate in the notes that there are violations of restrictions, setback lines, or agreement or deed terms and conditions?
- Does the survey show direct access from the property to a public road? If not, does it show access to a private road or right of way and do the deeds for the property or a recorded easement or right of way agreement grant right to use the private road or right of way?
- Does the survey show completed improvements as opposed to proposed construction/foundation?
- For purposes of making sure all appropriate exceptions are included in the title commitment and policies, note if the survey shows any driveways, party walls or rights-of-way used in common with others; whether the property borders solely or partially on the bed of any navigable stream, river, lake or other body of water; whether the property is improved by a pier or bulkhead; and whether any portion of the property lies in the bed of any road, street, alley, sidewalk or other right-of-way
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