Key Point. Lenders require property surveys on almost all commercial loans, and the ALTA/NSPS Land Title Survey is the standard in the industry. Order the survey early.
One item high on both purchaser and lender due diligence lists of things to examine is a property survey (for this discussion referred to simply as a “survey”).
What Kind Of Survey Should I Get?
In its simplest terms, a survey is a drawing of the boundaries of a property and those things that would be observed by an inspection. However, the detail of what is to be shown can vary widely, and that detail is defined by the scope of services that is agreed to between the client and the surveyor. Accordingly, you need to consider what is to be shown on the survey, and for what purpose the survey is being prepared before contacting the surveyor. Is it to be a boundary survey of an acreage tract or residential house, an as-built survey for approval of a completed building, or a full blown ALTA/NSPS Land Title Survey (“ALTA survey”) to show the location of all buildings, parking spaces, recorded and unrecorded easements, and zoning information. Like most things in life, the more time and work that is required to do the field work, research prior surveys and land records, and prepare the plat, the more costly and time consuming it is likely to be. Think before you contact the surveyor, and then be specific in discussing the scope of services to be performed. You won’t need the detail (and cost) of an ALTA survey for a residential home survey, but you’ll usually need the detail of an ALTA survey to close a sale or loan on an existing shopping center, office building or other commercial property.
Tip – Order the title examination at the same time, or preferably before ordering your ALTA survey. Recorded easements are reviewed by the surveyor, included in notes on the plat, and the locations are shown on the ALTA survey. Surveyors must have the title commitment and copies of the recorded easements in order to complete the field work for those easement locations.
Detail Required By Lenders
Most lenders making loans secured by commercial properties will require an ALTA survey and either the lender or its attorney will often send out survey requirements shortly after issuing the loan commitment. Those can simply be forwarded to the surveyor.
The ALTA Survey
The American Land Title Association representing the title insurance industry, and the National Society of Professional Surveyors (“NSPS”) representing the survey industry jointly adopt Minimum Standard Detail Requirements For ALTA/NSPS Land Title Surveys, the latest version being effective as of February 23, 2016 (F1) (the “Minimum Standards”). The current Minimum Standards can be found here. The National Society of Professional Surveyors has replaced the American Congress on Surveying and Mapping (“ASCM”) in adopting the Minimum Standards.
A survey prepared to ALTA Minimum Standard should include:
- Boundary lines shown
- Corners verified or marked
- Overhead utilities and evidence of possible encroachments
- Encroachments, gores and gaps
- Location of improvements within the property
- Easements shown and labeled for title insurance commitment
- Long legal prepared
In addition to what will be shown on the survey by the Minimum Standard Detail Requirements, the client may also request additional optional survey items that may be negotiated between the surveyor and the client. Those additional items are set forth in Table A to the Minimum Standards, which is a simple list be checked as to which additional items are to be shown on the survey. Table A as a fillable table can be found here.
Table A details that lenders often request are:
- Monuments placed at all major corners of the boundary of the property unless already marked
- Address of the surveyed property
- Flood zone classification based on federal Flood Insurance Rate Maps
- Zoning – if set forth in a zoning report or letter provided to the surveyor by the client, the current zoning classification, setback requirements, the height and floor space area restrictions, and parking requirements (check with your surveyor as to letter source)
- Substantial features observed (in addition to improvements) such as parking lots, signs, billboards
- Number and type (e.g. disabled, motorcycle, regular) of parking spaces
- Names of adjoining owners according to current tax records
- Wetlands delineation
- Plottable offsite (i.e. appurtenant) easements
The Survey Title Block And Surveyor’s Certificate
The title block of the survey should state for whom the survey has been made. Ask the surveyor to title the survey as follows: ALTA/NSPS Land Title Survey for (name of purchaser or borrower), (name of lender if there is a loan), (name of title insurance company).
Lenders often ask for a surveyor’s certification to appear on the face of the survey. An example of an ALTA certificate is as follows:
To [name of insured], [name of lender], and [name of title company]
This is to certify that this map or plat and the survey on which it is based were made in accordance with the 2016 Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys, jointly established and adopted by ALTA and NSPS, and includes (select the ones that apply) (items __________________ of Table A thereof. The field work was completed on ______________.
Date of Plat or Map:_________ (Surveyor’s signature, printed name and seal with Registration/License Number).
How Does A Survey Relate To Title Insurance?
You’re getting title insurance, so you will have coverage against all title problems, right? Not so. The process of issuing a title insurance commitment and subsequent title policy begins by a title insurance company (or an agent of a title insurance company) ordering a title examination. A title examination is a research of the deeds, mortgages, liens, and property taxes recorded in the land records and tax records of the county in which the property lies. Those records show who claims an interest in the property as owners, and recorded easements holders and holders of liens. Those records don’t show the location of buildings on the property, whether they encroach on property of adjacent owners, the location of setback lines, access to streets, the actual location of boundary lines being observed, and other matters. For that purpose one must rely on the property survey. Things that a survey may reveal constitute claims by others to use the property just as do documents recorded in the courthouse.
Title Insurance Survey Exclusion
The American Land Title Association (“ALTA”) title insurance policies, which are used by all title insurance companies doing business in Georgia, includes as an exclusion to coverage: “Any encroachment, encumbrance, violation, variation, or adverse circumstances affecting the Title that would be disclosed by an accurate and complete land survey of the Land” (Exception #2 in Schedule B, Part II of the ALTA title policy). Title companies will remove this standard exception if a new survey is made, and will add to the list of title exception those matters that the new survey shows.
The ALTA form title insurance policy provides basic coverage against losses arising from title claims specified in the policy, but not all claims that could arise are covered by basic title insurance. However, there are at least 40 title endorsements available that provide additional insurance coverage against specified losses. One of those often requested by both lenders and owners is a zoning endorsement which insures against loss in the event that the property doesn’t meet the requirements of a zoning ordinance for its zoning classification. Most zoning classifications contain a requirement for a specified number of parking spaces. Title companies rely on the property survey to establish the number of parking spaces, and where those are located on the property. It is a time consuming process to count the parking spaces and delineate those on the survey. If you intend to get a zoning endorsement, parking spaces must be shown on the survey.
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