by Jennifer Schulz
Before purchasing real estate, buyers should take the time to make sure they know exactly what they are buying. A good way to verify this important information is to obtain a survey, which diagrams the boundary lines, easements, improvements (e.g. buildings, parking lots, and fences) and encroachments. Buyers who choose to forego surveys assume several risks that often can lead to costly disputes. Below are five specific reasons buyers should obtain a survey.
Title Insurance Coverage for Off-Record Matters.
It is standard for buyers of real estate to obtain title insurance to protect against defects in the title to their new property. The standard title insurance policy is the California Land Title Association (CLTA) Standard Coverage Policy, which only covers matters that are in the public record and excludes any defect that is off the record and not disclosed to the title company. In order to insure against risks that are not contained in the public record but would be discovered through a physical inspection of the property, a buyer can get extended coverage through an American Land Title Association (ALTA) Extended Coverage Policy, which requires the buyer to obtain a survey of the land to reveal potential issues. An ALTA policy is the broadest form of title insurance available, insuring many risks not covered by a CLTA policy, including, for example, prescriptive easements, building encroachments, and construction work that could lead to mechanic’s liens on the property.
Confirm the Value of the Property.
A survey may reveal circumstances limiting the development potential of the property, such as an easement on the property for a future railroad or the widening of an adjacent roadway. The buyer’s inability to place any improvements in such an area should be taken into consideration when determining the purchase price. Likewise, a survey will show whether there is existing access to the property for ingress and egress and whether all required utilities are available on the property or in the adjacent public right-of-way.
Complete and Accurate Legal Description.
It is not uncommon for the legal description that was used in prior transfer deeds, such as grant deeds, to be incomplete or inaccurate. A survey reveals the actual property lines, alerting the buyer to any problems with the legal description provided by the seller.
Opportunity to Object to Defects in the Property.
In today’s market, it is customary for sellers to use grant deeds to sell real estate that specifically carve out any defect in title that would have been revealed by a survey or physical inspection. Without a survey, the buyer may not only lose the opportunity to object to the title company over defects that would have been revealed by a survey, but also will be unable to raise these claims against the seller. To avoid this, the buyer should obtain a survey before the end of any inspection period during which the buyer may terminate the contract for any reason. Otherwise the buyer may find itself without recourse against the seller if the buyer discovers encroachments or easements affecting the value of the property after closing.
A Picture Is Worth a Thousand Words.
Reading a legal description does not often offer the buyer any insight into what the buyer is purchasing. A survey provides the buyer with a visualization of the property; without one, the buyer does not know what the legal description really means.