Prior to the introduction of title insurance, closing a real estate purchase without a survey was almost impossible. Today, with the advent of title insurance, banks will advance mortgage funds without a survey provided that a title insurance policy has been issued for a property. However, having a provision in the Agreement of Purchase and Sale requiring the seller to deliver a survey to the buyer is highly recommended. A survey will tell a buyer the location of fence lines, encroachments, or easements. Without a survey, a buyer will be unaware that a fence between his or her house and the neighbour’s house may in fact be located (or encroach) 2 feet on the buyer’s property. For a lot 120 feet deep, this could result in the loss of use of 240 square feet of property. Encroachments can also occur where a swimming pool or garage may have been partially built on a neighbour’s property. It happens.
Buying a house with an intention to add an addition or a swimming pool is going to create difficulties for a buyer if it is disovered after closing that a hydro or cable line is buried underneath the ground in the backyard right in the location where to the pool or addition was to be built. Building over such lines are prohibited because the utility company has a right or “easement” to maintain or repair its property. An up to date survey would reveal the existence of these easements.
So what is a survey? The term “survey” is a drawing made by a licenced land surveyor that shows the boundaries of the property. In order to prepare the survey, not only does the land surveyor go to the property and conduct measurements but he or she conducts a title search to determine if there are any registered easements or other documents relating to the property.
So what about title insurance? Title insurance will “protect” a buyer after closing in the sense that it offers “forced removal” protection for losses a buyer may suffer because he or she may have to remove all or part of an existing structure due to survey defects such as encroachments, or violations because a deck is built too close to the lot line, lack of a legal right of pedestrian and vehicular access, or zoning non-compliance.
The thing is, a requirement in the Purchase Agreement that a seller provide an “up to date survey” to the buyer could reveal these problems to a buyer before he or she completes the purchase of the property and give the buyer the choice to either “walk away” or force the seller to fix the problem.