Thursday, June 25, 2009

Survey Says?

I've recently received questions from real estate agents regarding surveys. As if sensing my desire to prepare a brief blog post on the different types and uses of surveys in this region, the Maryland Land Title Association published their Summer 2009 Edition of The MLTA Commitment featuring, yep, you guessed it...surveys! So, with some help from that newsletter, here is what a real estate agent or loan professional needs to know about surveys. We'll address the three major types in ascending order of cost and complexity.

Location Drawings: A Location Drawing serves one primary purpose: To allow the title agent to remove the survey exception from the loan policy. A lender wants a clean title policy. A title policy has an exception for matters that a survey would reveal. Solution? Get a Location Drawing done which allows us as the title company to remove that exception. A Location Drawing simply shows the outline of the property along with the approximate location of the house and improvements. It does not show the actual boundary lines or show corner markers or monuments. It typically costs anywhere from $150 to $500 depending on the region and vendor. A Location Drawing is typically required for all residential purchases of real estate in MD and VA with a few notable exceptions (including condominiums, unimproved lots, and where the lender agrees to a "no-survey" program).

Boundary Surveys: The more mature, sophisticated cousin of the Location Drawing is the Boundary Survey. The Boundary Survey locates the exact boundaries as well as corner markers and monuments. These can cost $750 up to and exceeding $2,000 because of the field research required. So why order one? If the buyer or owner of the property is contemplating an improvement or subdivision, or has reason to believe some issue exists that such a survey would reveal, they may choose to get a Boundary Survey. Once the Boundary Survey is done, the surveyor can very easily create a Location Drawing from that which could then be used to remove the survey exception from the loan policy.

ALTA/ACSM Survey: The residential real estate agent will rarely see an ALTA/ACSM Survey. These are reserved for commercial properties, and are the most sophisticated and detailed (not to mention expensive) of the survey types. An ALTA/ACSM surveyor will likely do several "versions" of the survey, and will often depend on research done by the title examiner to locate (or eliminate) easements, reservations, etc.

I'm a real estate agent. What do I do with this info?

1. Let your buyers know they will likely be required to purchase a Location Drawing costing $150-$500, which the title company will order for them.

2. Ask your title company for a copy of the survey as soon as they receive it so you have the opportunity to review. An issue may not be fatal to the passing of clean title, but may need to be excepted on the title policies.

3. If you believe there is an issue on the property, or if your buyer is planning on adding fences, garages, barns, driveways, etc., talk to your title company or attorney about the benefits of a Boundary Survey.