General Description

When purchasing a commercial property (or any type of real property) ordering the right survey and appropriate review of the survey is essential. In commercial real estate deals, purchasers often order a title report and decide against ordering a survey in order to save money, but having a title report without a survey is like trying to use words to describe a photo. Ordering and reviewing both a survey and title report are the essential parts of any commercial real estate deal.

But what is a survey? In general, a survey is a comprehensive analysis of the property to determine the actual boundary lines and the true corners of a parcel of land, all of which hopefully match the metes and bounds description in the vesting deed. However, depending on the type of survey (more below), a survey can also be used to indicate the location of any easements affecting the property, to mark certain exceptions to coverage cited in the title report, access to public roads, visible utilities, existing improvements, and other significant observations such as encroachments, wetlands, parking configurations, applicable zoning, topography, and flood hazard concerns, among other things.

What types of survey are there? Depending on the type of property, the intended use and other factors, a purchaser should decide what type of survey is most applicable to the deal. There are several different types of surveys, such as a Boundary Survey, an ALTA/ACSM Survey, a Topographic Survey or an Aerial Survey, each of which is further described below. Sometimes, however, the type of survey is not determined by the purchaser but by the lender, so before ordering a survey always check with the lender’s survey requirements.  

Boundary Survey

A boundary survey is a type of survey used to determine the actual property lines against the metes and bounds described in the deed, and sometimes, but not always, a boundary survey may indicate any recorded easements or encroachments from the property with neighboring properties. A boundary survey may also reference any recorded map or plat for the property. In order to produce a boundary survey, the surveyor will go to the property, measure the lot’s dimensions, calculate distances and, if specifically requested, the surveyor will access public records to determine any possible encroachment or easements. The boundary survey will also identify fences located in the property, and any improvements such as any existing structures, pool, garages, and so on. If specifically requested (and permitted by the owner), the surveyor can also place physical markers (or “monuments”) on the property to show the corners and boundaries of the property.

The boundary survey is usually used for residential transactions or where the purchaser does not intend to make any significant changes to the layout of the existing structures after the closing. A boundary survey should not be used if the purchaser intends to do any development or any major renovations to the existing structures. The cost of a boundary survey will vary depending, mostly, on the size of the property and on the accessibility of the lot itself and to the access to public records if requested to be included in the survey. Upon completion of the research and measurements, the surveyor will create and deliver to the potential purchaser or property owner a drawing with all of the surveyors’ findings. Any survey quote should include at least two (2) full sized standard surveys as well as an electronic pdf. copy.

ALTA/ASCM (“ALTA”) Land and Title Survey

An ALTA/ASCM (“American Land Title Association” and “National Society of Professional Surveyors” -formerly known as “American Congress on Surveying and Mapping”) survey is a type of survey mostly used for commercial properties and especially for real estate development projects. It is usually requested by lenders when a potential purchaser applies for a construction loan. An ALTA survey is a boundary survey with comprehensive and additional stringent national standards set forth by both ALTA and ASCM organizations.

Topographic Survey

The ALTA survey is one of the most detailed and expense surveys available on the market and it comes with a much higher cost that the other options. Although not every real estate transaction needs an ALTA survey, having one done for the property is well worth the additional costs, especially in the case of new development or if the purchaser intends to make significant changes to the existing improvements after the closing. One of the most important reasons to order an ALTA survey is that this type of survey provides a comprehensive picture of the property that will  allow a potential purchaser or developer to see potential problems with their future plans for the property, including not only the boundary lines, the location of encroachments and easements but also any and all structures, rights-of-way, roads, utility lines, fences, any other recorded documents that can be plotted as well as any other visible elements that could impact the use of the property or the owner’s or purchaser’s ownership, such as markers and other visible structures that may indicate underground utilities or

A topographic survey is a 2-D type of survey representing the actual layout of the land and used to determine the elevation points and contour lines of the property, collecting both man-made features as well as natural features, such as vegetation and creeks or wooded areas, located on the land. It is often used by architects or site development engineers in furtherance of a new development, in conjunction with an ALTA survey. It can be used to determine the location of future sewer and water lines and to identify drainage issues It is also often used by certain industries, such as the petroleum, forestry or geology industry, to make more complete maps of the topography of the land with their survey findings. The topographic survey will also assist the architects and engineers with determining the amount of soil that will have to be removed from the property or in the amount of additional fill that needs to be brought onto the site before construction can commence.     

 Aerial Survey

The last type of survey is the aerial survey, which is used for properties that are larger than your typical property or a commercial real estate transaction. Some of the real estate transactions that use this type of survey have hundreds or thousands of acres or are non-standard properties because any other type of survey would require measuring all corners of the land, and any other element on the property, which would be a challenge and a very expensive process. These types of surveys are often not used in the typical commercial real estate transactions.

It is important to mention that the aerial survey is not as detailed as the other types of survey and it will be done by collecting images and geomatics from helicopters, planes, balloons, drones or any other aerial available method on the market. Note that an aerial survey is not a satellite imagery. In fact, the aerial survey will have better image resolution and quality than the satellite imagery.

Survey Reading by Title Company

When a purchaser receives the complete survey from the surveyor, the next step is to provide it to the title company so the title company can describe in written form the various findings depicted in the survey, such as driveways, retaining walls, and any other improvements, encroachments or other items located in the property. This is known as a “survey reading”. Typically, the title company will exclude the items noted on the survey reading from its insurance policy; however, purchasers should attempt to obtain “affirmative insurance” from the title company for as many items listed in the survey as possible.

Contract Protections

Contract provisions with regards to surveys are important for both seller and purchaser in order to protect their respective interests. Below are a few tips for negotiating a contract with respect to surveys:   

Seller Tips

• Limit reps as to only what is shown on any existing survey that the seller has in its possession and specifically referenced in that survey. 
• Do not accept any provisions that require seller to pay for an updated survey, although it is reasonable for seller to pay for same if seller is defaults or fails to close.  

Buyer Tips

• Carefully review the title report and confirm that all title exceptions are plotted on survey.
• Make sure Seller delivers all documents related to the land description and any existing surveys. If no existing surveys found, try to get Seller to agree to pay for new, updated, survey of the land (see above).
• Confirm metes and bounds description on deed/title report exactly matches survey boundary.
• Read all notes on survey and obtain any and all referenced documents (for example, read all referenced plats and recorded maps thoroughly).
• Have surveyor plat any setbacks in applicable zoning and measure the distance from the boundary to all improvements and then make sure no setbacks are violated by the existing structure.
• Look for any unusual physical objects or symbols that do not have notes or descriptions. If there are any, request clarification from the surveyor. For example, if a is a marker is shown, confirm the location of any underground related utilities.
• Make sure all title exceptions that can be plotted are plotted on the survey.
• Carefully review the survey’s boundary, fences and any encroachments on the property or nearby properties.
• Obtain certificate of occupancy (“CO”) and look on the survey for any building additions that are different than the CO.
• Make sure the survey is certified to lender, title company and buyer

In the Concrete Jungle

New York City is known for old surveys. Many of the existing surveys can be decades old and don’t indicate the current improvements of the property. When trying to update an existing survey in NYC, the procedure is usually a simple visit to the property and handwritten notes indicating anything that the surveyor may think has changed since the last survey “update”. While that is fine if you are purchasing a residential property or a simple commercial property that will be used “AS-IS”; a simple “survey update” in the concrete jungle can cause many issues when financing the purchase or when redeveloping the property or otherwise making major changes to the existing improvements after the closing. In either case, the best way is to order an ALTA survey and have a new survey prepared for the property to show any easements, encroachments and any other improvements in the land that could affect the purchaser’s development or renovation plans of the property.

Good Resources:

ALTA rules

Disclaimer

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