A title insurance company may be willing to insure your real estate transaction without requiring a survey, especially in urban and suburban subdivisions. This, however, should not be the deciding factor on whether a survey should be performed. A key consideration is whether or not you plan on making improvements to the property such as an addition, garage, shed, or fence. Survey issues often arise when a new owner requests a permit from the local permitting authority. A survey may reveal that the permit cannot be approved because the desired improvements encroach onto adjoining land, the buyer does not own portion of the land, there is no recorded or legal access to the land, or the improvements are not constructed on the land.
What does a survey disclose?
A survey will disclose many adverse matters, such as:
- encroachments of the improvements constructed on the property onto adjoining land or easements (forced removal of these improvements),
- the encroachment of improvements from adjoining land onto the property (potential adverse possession),
- fence lines which are not coincidental with the property boundaries (potential adverse possession),
- use of the land by third parties (trails, utilities) for which there are no recorded easements (potential prescriptive easements),
- access to the property by way of an abutting public street, or easement (physical access may be different from the legal access insured by the policy).
Current survey vs. existing survey
There is a distinction in the real estate contract between a “current” survey and an “existing” survey. A current survey is a survey with a date of certification by the surveyor contemporaneous with the transaction. An existing survey is a survey prepared for a prior transaction and the date of certification is not contemporaneous with the transaction.
There is an important distinction between the two forms of survey in the context of the termination of the contract. The buyer can terminate the contract by objecting to any unsatisfactory matter with a current survey. The seller has no right to cure the defect. However, an existing survey falls under Section 8.2 (Off-Record Title matters) which allows the seller the opportunity to provide a resolution to the unsatisfactory matter, failing which the contract may terminate.
What are the contract terms for surveys?
Section 9 of the Contract to Buy and Sell Real Estate (Residential) (1-9-12) provides for the Seller or Buyer to obtain a current survey (i.e. an Improvement Location Certificate or Improvement Survey Plat). The Buyer may terminate the Contract on or before the Current Survey Objection Deadline, if the current survey is not received in a timely manner by the Buyer or based on any unsatisfactory matter with the current survey.
The Seller is required to deliver to the Buyer as part of the Off-Record Matters, true copies of all existing surveys in Seller’s possession pertaining to the property. The Buyer has the right to object to any adverse matters disclosed by the existing survey or terminate the Contract by delivering a Notice to Terminate or object by delivering a Notice of Title Objection to the Seller.
Generally accepted guidelines when a survey may not be required
The title insurance company may agree to delete the survey exception using various guidelines based on the risk to the title insurance company. These guidelines vary depending on the type of use of the subject property. The guidelines listed below are general in nature and will differ between the different title insurance companies.
Residential properties (One to four family residences)
In general, no survey will be required to delete the survey exception in policies for residential properties if the residence is in a platted subdivision, i.e. the property is described by lot and block. If a survey was prepared for a prior transaction and this survey is provided to the title insurance company, it will be accepted with an affidavit from the seller that there have been no changes to the property since the date of that survey.
A survey (usually an Improvement Location Certificate) will be required to delete the survey exception in owners’ policies and loan policies for residential properties:
- If the property is described by metes and bounds (i.e. the property is not in a platted subdivision); or there has been recent construction which affects the footprint of the improvements in relation to the property and easement boundaries.
Types of surveys
There are a number of different types of survey that may be acceptable for this purpose, depending on the nature of the transaction.
- Improvement Location Certificate: This is the least expensive of the types of surveys available. It is typically used in the purchase of single-family residential property located within the established subdivided urban and suburban areas. However, it is based on assumptions regarding the boundary location based upon the professional land surveyor’s general knowledge of land boundaries and monuments in the area, and is not a precise survey. It will depict the property boundaries and the improvements, as well as any encroachments and easements and will be signed and certified by a land surveyor.
- Land Survey Plat: The land survey plat will include a scale drawing of the boundaries of a parcel of land, all recorded and apparent rights-of-way and easements, all dimensions as surveyed, the written property description, north arrow, scale used, description of all monuments used, and the completion of the prescribed certificate by the land surveyor.
- Improvement Survey Plat: An Improvement Survey Plat means a land survey plat as defined in the statute (see above), resulting from a monumented land survey showing the location of all structures, visible utilities, fences, hedges or walls situated on the described parcel and within five feet of all boundaries of such parcel, any conflicting boundary evidence or visible encroachments, and all easements, underground utilities for which properly recorded deeds are available from the county clerk and recorder or title insurance company (i.e. from the commitment).