Survey Says...You Might Need a Land Survey

Article discuses arguments for and against expending money for a land survey prior to closing.

"Survey Says…" You Might Need a Land Survey

Today I was reflecting on some of the most common questions we get from homebuyers before a closing. In this article I wanted to address the importance of having a land survey performed during the due diligence period. Keep in mind that in some areas, local law or custom may require a purchaser to have a new survey performed. In Georgia, a land survey is not required under the law. Generally a homebuyer may elect not to have a survey performed, unless the lender providing finance requires one. Generally, lenders in Georgia do not require surveys. The point of this article is not to alarm, but to educate, and encourage potential homebuyers to make a conscious evaluation of the risks as to whether a survey should be ordered prior to closing or not. Here are the most common reasons people object to having a survey performed–
  1. Buyer does not want to incur the cost to have a survey performed.
  2. Buyer perceives that there is little risk in buying land without a survey.
  3. Buyer relies on the original governmental permitting (e.g. "no survey problem could get by the government").
  4. Buyer is told that an owner's title policy provides survey protection.
  5. Buyer or real estate agent feel it is better to "let sleeping dogs lay" by cognizantly proceeding without a survey.
  6. Buyer chooses to rely on an existing survey or subdivision plat.
Let's address each point.

#1 – Cost of "As Built Survey".

A land survey in Georgia generally runs about $400 for a property within a subdivision an acre or less. (Some title companies and law firms charge a la carte fees for "survey review". I'm such a fan of surveys, my law firm does not currently charge a single penny to review a survey.) Sometimes surveys are more expensive if there has been an eminent domain action, for example, where the government widens a road adjacent to the property; or if the boundary lines are difficult to ascertain legally or physically. Also important to note is that a long form ("standard" or "basic") owner's title insurance policy may afford better coverage for survey matters than the more expensive short form ("enhanced") policies. The price difference between long and short form policies generally starts to exceed the cost of a survey around a $600,000 to $700,000 price point. At that price, it becomes increasingly important for the cost conscious to evaluate the true savings of having a new survey performed or not. (Click here for a more detailed explanation of title insurance and surveys.)

#2 — The property is "Brand New!" or "Been Around Forever!"

I have not seen any statistics, but in my experience a property owner is much more likely to have a survey problem on a "new" property than an old. But because the public perceives that there is such little risk, survey problems are often not discovered until future purchases! In fact, people who build themselves are often so certain of their boundary lines that they scoff at even the idea of having a survey performed before construction is begun.

#3 — The zoning and permitting process should weed out survey problems.

In an ideal world, yes, the permitting process should verify the home footprint fits within the required lot and setback lines. To this I would retort, did the government have its own survey performed? Of course not. There are many reasons why a government inspector may not pick up on these types of problems. Construction sites, are well, construction sites! There is not a template laid out on the ground highlighted in yellow, what legal ownership exists on the ground. Builders often mark their own property lines. When compared to unmarked or non officially marked property corners, a drawing can always make a foundation appear as if it's in the right place, even when it's not. Sometimes the lots are correctly marked, but the home is erected on the wrong lot. Reliance on the government is probably the weakest place to hang a safety harness.

#4 — Owner's title insurance protects against survey issues.

It is true that an enhanced owner's title insurance can protect against certain survey matters that are disclosed after the purchase. However, the most comprehensive coverage is afforded only to the main dwelling structure. If there are substantial improvements on the property other than the main dwelling structure, it's generally advisable to have a survey performed. Policies may offer coverage for detached garages, swimming pools and walls, but the coverage is likely to have low limits and high deductibles. For this reason it's best not to rely on these coverages when the property contains additional improvements to the main structure. (Title website provides additional explanation of title insurance and surveys.)

#5 — "Ignorance is bliss" or "don't ask, don't tell."

Can you believe that some people do not want to be made aware of a survey issue prior to closing? You bet! The title insurance industry has done a great job of touting the benefits of enhanced title insurance policies (available for a higher premium) instead of encouraging a proper inspection of the property. It is true, a survey issue may never be disclosed until a survey is performed. And it is also true that a bad survey can kill a property closing. Unfortunately, because commissioned sales people want the deal to close, a property buyer may never receive impartial advice about the importance of identifying title defects before closing.

#6 — A survey is not needed when a subdivision plat is available.

Over the years, we have seen plenty of survey issues appear in platted subdivisions. The reason is that the property is (normally) constructed after the plat is prepared and recorded. Since the subdivision plat depicts only the boundary of the lot lines, it usually does not represent the structures as they appear on the new lot. For this reason, there is no guarantee where on a particular lot the structure was actually constructed, or even if the house was built on the correct lot.

In my next article, I will discuss the consequences of not having a survey and some striking survey problems we have encountered in the past.

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