Buyers: 4 Good Reasons to Order a Survey
Sellers: The problems with signing a Survey Affidavit
1) A survey provides a visual representation of the lot you are purchasing and the location of improvements (house, fences, driveway, well, septic field location, etc.) on the lot. For example, a typical survey will show the location of any easements of record located on your lot, and often will identify if there are unrecorded utility lines located on your lot. In some of the older sections of Chapel Hill it is not uncommon for a lateral sewer line, or other lateral utility line to be identified by the surveyor, but which are unrecorded easements. This is a potentially serious title problem. A survey could result in providing you with information that might influence your decision to buy the property, or allow you the opportunity to have the Seller correct a legal defect of your title that will only be discovered by a survey.
2) It is advantageous to have Owners coverage removing survey matters on your title insurance policy. Your chosen lender will typically not require a survey for you to obtain your home loan. Title insurance companies will customarily give your lender coverage over all survey matters regardless of whether you as the have purchased a new survey. However, the title insurance company will not provide you, as the new owner and buyer, with survey coverage unless you have a current survey.
It is possible, if there is an old survey, that the title insurance company will provide coverage based on that survey, but your owners coverage regarding survey matters will be limited to what that survey showed as of the date of the old survey. For example if you have a survey from the Seller of your lot that was completed on November 8, 1992, the title insurance company could cover you as a with survey coverage as of November 8, 1992. However, if there have been any changes or improvements to the lot since November 8, 1992, there will be no coverage for you as an Owner over those changes. Therefore, if a fence was constructed by your neighbor in 1998, and the fence encroaches onto your lot, the title insurance company will not insure over that encroachment. If you end up in a dispute with the neighbor you have no insurance to cover that problem.
So, when your lender states that you do not have to have a survey to purchase the property remember what your lender is really saying is that the lender will have title insurance coverage over survey matters regardless of whether you order a survey. However, your owners title insurance policy will not cover you for survey matters unless you have a current new survey, or as discussed in reason 3 below, the Seller signs a Survey Affidavit..
3) Most Sellers will not and should not provide you with a Survey Affidavit. Let me explain this further. Most title insurance companies will accept a Survey Affidavit signed and notarized by the Seller that states the survey attached to the Affidavit (which survey was typically completed sometime during the time the Seller owned that property, usually when the Seller purchased the property) remains accurate. The Affidavit typically requires the Seller to certify that there have been no improvements added, no encroachments upon nor alterations made, nor matters which question the location of the property lines from the date of the survey, and that the survey represents an accurate presentation of the physical status of the lot and improvements. The customary Survey Affidavit form also requires the Seller to indemnify the title insurance company, including attorneys fees, in the event the title insurance company becomes liable under its policy directly or indirectly, due to improvements or construction completed subsequent to the date of the survey attached to the Affidavit. Most Sellers don’t want to sign the Affidavit and frankly, a Seller generally should not be willing to sign the Affidavit. A Seller signing a survey Affidavit could be exposing themselves to trouble if a neighbor were to have made an improvement that impacted the Seller’s lot. For example, a fence put up by a neighbor that encroaches onto the Sellers lot. Even though the Seller didn’t make the improvement, the Affidavit if signed could result in the Seller having to indemnify the title insurance company for liability under the title insurance company policy. This all gets rather complicated, which is why a smart Seller should not sign a survey Affidavit.
4) The cost of a survey is minimal in light of the large investment made when you purchase a house. Typically, most local surveyors charge between $300 -$600 for a survey of a lot that is one acre or less. When you consider that the survey provides you with the protection of knowing before you close on the purchase whether your lot has any encroachments, defects or related concerns, and when you consider that it will allow you to have full Owners coverage over survey matters if the survey shows no defects or problems, it argues for a to budget for a survey in their financial planning for the purchase of a house. If you are considering adding a fence to your lot after you close, many surveyors will be willing to flag the line for minimal cost. It is important if you are planning to put up a fence that you have a survey of the exact location of the line. A fence incorrectly constructed onto your neighbors lot always creates a title problem that may require correction at the time of selling your home.