Purchasing Property: Survey Considerations

  by Donald H. Upjohn

Spring 2000

Purchasing real property is often a hectic and confusing process. Typically, a purchaser focuses his or her energy on locating an acceptable parcel and negotiating a price. There are, however, many other matters to consider - particularly important is whether to obtain a property survey.

Simply put, a survey is the process by which a licensed surveyor takes the boundaries to a parcel of property from a written legal description and locates them on the ground. The surveyor also locates improvements, easements and other setbacks on the property. Generally, the surveyor also prepares a map and a narrative statement. Depending on the size and location of the parcel, survey costs can range from a few hundred dollars to three thousand dollars or more.

It is important to note that the standard forms of title insurance except discrepancies that a correct survey would disclose. This exception means that if a boundary dispute arises after the sale closes, the title insurer will generally provide no insurance coverage.

In transactions involving new construction, the lender often requires a survey, which becomes part of the loan package. In other situations, the need for a survey is frequently not analyzed. Purchasers should consider surveys in every case. If one is required, the parties should incorporate that requirement and allocate the cost in the earnest money agreement.

As a matter of practice, purchasers generally forego surveys in the purchase of established residential properties. Usually, landscaping reveals boundaries, and a visual inspection will disclose original corners. In many cases, however, the boundaries are blurred. Encroachments tend to exist where property owners have added garages and storage sheds. Those problems can be avoided by a simple corner check - which is a fairly quick and inexpensive surveying procedure.

In contrast to an established residence, purchasers buying rural property should almost always obtain a survey. In those cases, underbrush often conceals corners, and established physical boundaries, like fences and hedgerows, tend to wander.

Parties to a property transaction should always address the need for a survey before signing an earnest money agreement. Most standard forms do not have a prepared question concerning a survey. Consequently, the parties need to add that requirement as a special provision. Ideally, the purchaser should require that the seller prepare and pay for a survey. If the seller refuses, the purchaser may still require a survey as a condition to closing, provided he or she pays for it.

If a survey is prepared, it should be compared to the title report. The survey should disclose all easements of record, and all easements shown on the survey should appear as exceptions in the title report. The surveyor's property description should also match that of the title report. The survey should also meet the title company's or lender's minimum survey standards to remove the general survey exception in the title policy and to meet the lender's loan commitment requirements.

A survey may slow down a property transaction. However, as indicated above, every purchaser of real property should consider obtaining one before closing a transaction. By doing so, purchasers may avoid problem transactions and save time and money in the long run.