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Nadav Ravid is participating in the Advanced Commercial Leasing Institute - an invitation only seminar - held at Georgetown Law School in Washington, D.C. from April 6 - 8.

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January 2016: Who's on First? Understanding SNDAs

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SURVEYYYYY SAYS: Revisions To Minimum Standards For ALTA Surveys Effective February 23, 2016

By Mark H. Jackson


In the course of acquiring commercial real estate, buyers routinely conduct due diligence to determine the existence and nature of matters impacting the value and use of the subject property. A critical element of this due diligence is the creation and review of a land survey.

A survey, created by a licensed surveyor or civil engineer, depicts a wide range of property features, such as:
 
  • The boundary of the property and any boundary line discrepancies 
  • The location of easements and other recorded third-party property rights 
  • The nature and location of property access 
  • The location of buildings and structures on the property for purposes of identifying easement encroachments and setback requirement compliance 
  • The existence of physical features that encroach onto the property, such as utility lines and poles, billboards, fences, walls, driveways, roads, or railroad tracks

Surveys also serve as the best means for verifying the property’s legal description and acreage, which is important when the purchase price is based on the size of the land.
 
Without a survey, title insurance companies will specifically exclude from a buyer’s coverage matters that would be revealed by an inspection or survey of the land, thus limiting the buyer’s coverage to matters of public record. As a result, buyers will frequently, and often at the demand of a lender, obtain a survey in order to receive an extended title insurance covering survey matters. Most title companies and lenders require that the survey satisfy an inter-industry agreement called the “Minimum Standard Detail Requirements and Classification for ALTA/NSPS Land Title Surveys” (the “Minimum Standards”) adopted by the American Land Title Association and the National Society of Professional Surveyors. These Minimum Standards ensure that surveys will uniformly contain certain basic features and information, including the location of boundaries, access, bodies of water, easements, monuments, buildings, and other visible improvements. Surveys created pursuant to the Minimum Standards are commonly referred to as “ALTA surveys.”
 
The Minimum Standards also contain a list of optional features, called “Table A Items,” that can be shown on an ALTA survey, such as flood zone compliance, exterior building dimensions, the location of plottable offsite easements, and the capacity of parking areas. Title companies often require the inclusion of some Table A items in order to offer certain forms of extended coverage title insurance and endorsements.
 
The Minimum Standards are updated periodically, with the most recent update becoming effective on February 23, 2016. The 2016 update addresses several issues that have arisen since the prior update in 2011. Noteworthy changes to the most recent iteration of the Minimum Standards include the following: 
 
  • Section 4 clarifies and further describes the surveyor’s research requirements. 
  • Section 5.E now requires the surveyor to include any observed evidence of utilities on or above the surface of the property. Previously, that task was optional pursuant to Table A Item 11(a) from the 2011 Minimum Standards, which has been removed. 
  • Section 6.B now provides that, except in the case of an original survey, if a surveyor prepares a new legal description, the surveyor must provide a note on the survey stating (i) that the new description describes the same property as the record description, or, if it does not, (ii) how the new description differs from the record description. 
  • In Table A Item 6, inclusion of zoning classification information can only occur if the client provides the surveyor with a zoning report or letter. Even if the surveyor receives a zoning report or letter, the surveyor is not required to depict the building setback requirements if the zoning requirements necessitate any interpretation. 
  • Table A Item 13 now requires the surveyor to show the names of adjoining owners according to current tax records, rather than current public records, as was the more labor-intensive requirement of the 2011 Minimum Standards. 
  • Table A Item 18 from the 2011 Minimum Standards—relating to observed evidence of site use as a solid waste dump, sump, or sanitary landfill—was deleted. Parties must rely on a Phase One Environmental Assessment to identify these conditions. However, Table A Item 8 now includes “substantial areas of refuse” in the list of observed features to be depicted. 
  • Table A Item 19 from the 2011 Minimum Standards (i.e., “Location of wetland areas as delineated by appropriate authorities”) was moved to, and revised in, Table A Item 18, which now requires the surveyor to locate wetlands only if a qualified specialist has conducted a separate field delineation of wetlands. 
  • Table A Items 20(a) and 20(b) from the 2011 Minimum Standards—relating to the depiction of improvements and monuments within offsite easement areas—were consolidated and revised in Table A Item 19, which now requires the surveyor to plot disclosed offsite easement areas but not the improvements or monuments contained within the boundaries of the offsite easements. 

A buyer’s attorney, surveyor, engineer, title insurance company, and lender will need to coordinate with one another to ensure that the survey will meet the new 2016 Minimum Standards for ALTA surveys. The 2016 Minimum Standards, along with a comparison to the 2011 Minimum Standards, can be viewed on the American Land Title Association website. 

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