Why do I need a survey? This is a question that real estate attorneys often hear from their clients. The answer is that there are many reasons.
- Legal descriptions that do not work mathematically.
- Field monumentation that does not agree with the required legal description.
- Flood plains, wetlands and other environmental issues that affect the use and value of a property.
- Encroachments of improvements across the property boundary lines.
- Easements that restrict where buildings and other improvements can be built.
- Legal access from the property to a public street.
For these reasons and many others, attorneys know that a current land survey is an important part of the due diligence process in acquiring real estate. The items revealed on the survey may require resolution prior to the acquisition or the deal may fall through completely.
In presentations given to law firms, one of the standard examples of why a survey is needed is the million dollar manhole. A company purchased a large parcel and had big plans to improve it. Sometime after the sale, it was discovered that a large municipal sewer line ran through this property. Usually, an easement is recorded that then shows up in a title search as an exception to title. When the easement is plotted on a survey, it is easy to see where it is and how it affects the property. Unfortunately, no easement was recorded. A survey was prepared for this property. The easement was not shown on the survey because the title commitment did not list it in the exceptions.
So the buyer then sought a million dollars in damages for not being made aware of this problem prior to the purchase. The title company was off the hook because the easement was never recorded. However, the surveyor omitted showing the manhole on the survey. The field crew missed it during the data collection process. Since the surveyor is obligated to show all improvements and also all visible signs of a possible easement, they were held liable. It was an honest mistake, but the buyer ended up being compensated partly due to the fact that a survey was done. This example also illustrates how it is important for a survey firm that is chosen to perform the survey and have the insurance and resources necessary to cover a mistake.
We now have a newer example of an even larger loss. A waterfront home in Rhode Island was built on the wrong Lot. The $1.8 million house was built by a developer. Apparently, he was able to draw permits and construct the home without ever having a licensed surveyor involved. The developer went to sell the home in 2011. The buyer had a survey done and the error was discovered. The home was built on a public park. The land could not be sold to the developer due to deed restrictions. The developer lost every appeal including the Rhode Island Supreme Court. Now the house has to be removed.
A survey can be expensive, but the cost of not doing one can be far greater. Most of the time, no big problems are discovered on a survey, but as these examples illustrate, a loss can be huge.
The same guy that asks the attorney; “Why do I need a survey?” will be the same guy that asks “Why didn’t you protect me by ordering a survey?”
A survey can protect a buyer from many problems. When the new owner wants to sell or refinance, the survey is very valuable. It is usually not expensive to update it in the future. Selecting a survey firm that is stable, has a good reputation and will be around in the future adds value to the survey as well.