On more than one occasion, I have seen investors have to clean up a mess after closing that could have been prevented had they ordered a survey. Unfortunately, most investors avoid getting surveys. Why? They don’t want the added cost in doing their deal, they don’t believe surveys are that important, and surveys can take time to get, potentially holding up their closing. In this blog, I discuss when you should consider getting one. But let’s cover some basics first.
What Is a Survey?
For those of you new to real estate, a survey is a graphical diagram used to depict the boundaries of a property and illustrate the exact amount of land that is owned. Surveys will show any easements or encroachments on a property. For example, if the neighbor’s fence is encroaching on your property or sewer lines run through it, a survey is going to reveal that. These issues can range from being insignificant, where nothing needs to be addressed, to serious and needing to be resolved before closing.
What Issues Can You Experience?
Maybe your neighbor’s shed is inside your property line, or the in ground pool was installed over the utility easement, or your driveway starts on your neighbor’s property, before connecting back to your property. All of these can present problems after closing.
What problems can you have? – Problems with your neighbors, problems making any improvements to the property, incorrect or skewed appraisal values – are just some of the things that could be avoided by ordering a survey prior to closing. While you don’t necessarily need to order a survey on every deal, you probably want to take note on when you might want to order one so you don’t experience any of these issues with your deal.
Top Five Things to Consider for Ordering a Survey
- The property is located outside a metro area or what we would refer to as “in the country.” This also applies to properties not in platted subdivisions. If you are buying a property like this, you want to make sure that the boundaries are accurate and the amount of land included is what you are expecting. Also, you want to be sure there are no encroachments or easements that need to be corrected before you close.
- The property is on an old site or the existing survey on file is old. “Old” is subjective, but probably anything built before 1940 should automatically warrant getting a survey. It’s worth noting that even if the seller has the original survey from their purchase, if the survey is older than seven years, the title company may require a new one in order to issue any additional survey coverage.
- The improvement is oversized for the existing subdivision (i.e., a McMansion). You may have seen these houses in some older, more established neighborhoods where original homes are being torn down, and new houses that take up a larger portion of the lot are being built. If you are buying a deal like this, be sure to get a survey to make sure any improvement is within the boundaries.
- The legal description is a metes and bounds as opposed to lot and block. This is typically seen on older properties and/or properties outside a metro area. Metes and bounds can be very lengthy and contain reference points to mark the boundaries. If you see this in the title commitment, definitely get a survey.
- Utility easements don’t always warrant getting a survey. However, if there is a sewer line easement, you should get a survey to determine where the line runs on your property.
In addition to these five points, the fact is you may be required to get a survey if you are refinancing or selling and a traditional lender is involved. However, if the seller has a survey when you close on your purchase, you may not have to get a new one if the title company will accept it. Always ask the seller if they have one when you are contracting the house, but don’t make it a deal breaker if they don’t have it. Just order one at the time of purchase and get the additional coverage (for a nominal fee) from the title company.