Survey—do I need one?
The most common mistake made by home buyers is not having a survey done prior to purchasing a property.
Why is this a mistake? Without an ALTA (American Land Title Association) survey you have no recourse if at a later date it is found that your fences encroach on a neighbour’s land or that there are rights to easement by one of the service companies (this means that an electric, sewerage or water company has access rights to your property to carry out maintenance and repair). Consider the examples where a property owner has built a garage over part of the access rights and these service companies have then been known to remove the garage to carry out maintenance.
However most problems arise when improvements done to the property such as patios, pools, drives, garages and building extensions are either outside the building limits or encroach on a neighbour’s property. An ALTA Land Survey would DEFINE the dimensions of the lot and the POSITIONS of easements and building limits. Very importantly, they OUTLINE any improvements (garage, pool, patios, house, drive, etc.) and show whether they encroach upon a neighbour’s property, are outside building limits or create a barrier to access.
ALTA Survey— why doesn’t the Bank, Mortgage/Lender company request one?
Simply they insure themselves against any future problems that arise due to no survey being done prior to purchase. Look at the small print of the Buyer’s Title Insurance and exceptions are found in every title policy.
These are the standard exceptions:
• Survey matters
• Taxes or assessments
• Rights or claims of parties in possession not shown by public record
• Mechanic's liens not shown by public record
So if the title insurance excludes protection against Survey matters (boundaries, access rights, building limits), who is responsible for these if a problem arises after you purchase the property? YOU! That’s right, those clever Mortgage companies who lend to thousands of home purchasers every year know the value of excluding Survey matters in any title insurance policy.
Before 1997, every Mortgage/Lender required a mortgage inspection, a survey on a property before they would provide a loan. The Lenders wanted to make sure that their investment was protected from claims made as a result of access rights or encroachments.
Then the title companies granted insurance to the lender even without a survey because the insurance protected the lender’s interest in the event of a claim being made, that a prior survey would have shown. But it does not protect the buyer’s interest because the Buyer’s Title Insurance policy has the exclusions shown above. Therefore the buyer has no protection against the forced removal of a garage or the neighbour claiming increased boundary rights. Effectively the risk was passed to the buyer.
Why did this change happen? Simply to speed up the process of buying and selling houses as it is in everyone’s interest, except the buyer, to cut corners where possible. Consider the Real Estate agent who wants a quick sell to get his commission, the lender who wants the buyer paying interest on a loan as soon as possible, the Title Insurance company who wants payment for insurance cover as quickly as possible and the seller who wants the funds. So this small change in the insurance policy accelerates the process to the benefit of everyone except the buyer.
The best advice we can give is that for $500 - $700 a Land Surveyor is very good value for money and if defects are found you can use these findings as leverage to lower the purchase price or purchase another more suitable property. If you cannot afford an ALTA Land Survey we suggest the shorter version of a ‘mortgage survey’ costing around $250 that will at least show the boundaries and access rights, for example.