Part of the

Title and Land Survey are two vital facets of due diligence that ensure a successful acquisition in the realm of commercial real estate.  While many firms do not provide both title and survey services, it is crucial to understand the synergy between the title, survey and the client – which should be more of a Trifecta than a Bermuda Triangle when the right team is assembled. 

The Title Commitment

The importance of the Title Insurance documents (Title Commitment and the documents noted as exceptions on the title) is that they insure the property buyer and/or lender against any title-search errors as well as loss due to disputes over property ownership. The Title Commitment shows all exceptions to title that are recorded against the subject property. These exceptions can range from tax liens to easements to judgments against the property or fee owner. The Commitment shows all the criteria the buyer and seller must comply with for the aqcuisition to close. Typical items include any existing mortgage that must be paid off, and any Deeds that must be recorded. A less common item that would need removal prior to closing would be a Mechanic's Lien; a lien placed on the property resulting from the failure of the current or past owner to pay a contractor for work in place.

American Land Title Association or “ALTA” Survey

Within a commercial real estate transaction, there are many parties who have varied interests in the property and are looking to the ALTA Survey for key information. Although the main purpose of the survey is to delete the survey exceptions, the information contained on the survey proves beneficial to all parties and can answer numerous questions and concerns. The comprehensive survey depicts relevant facts about the property that, based on the clients needs and specific Table A requirements, can include but are not limited to:

 

• The professional surveyor’s findings about the property boundaries.
• Any observed easements whether appurtenant or burdened to the subject property.
• The improvements, utilities, public access and significant observations such as encroachments.
• Furthermore, the survey can also reveal specific facts about the property relating to zoning, flood hazard concerns, topography, parking configurations, wetlands, etc.

 

Title and Land Survey Working Together

The title policy works in conjunction with the survey and provides insurance protection for the lender or buyer against:

 

• Boundary line conflicts with adjoining properties;
• Encroachments onto and from adjoining properties;
• Rights of parties to the property usually in the form of easements, leases, or other encumbrances;
• The contiguity, or lack thereof, of multiple parcels that combine to form the property;
• Access to public highways; and
• Matters on the property that may affect zoning issues or compliance.

 

The insurer uses and relies upon the ALTA Survey to remove and sometimes add exceptions to their insurance coverage. In the issuance of their policy, the insurer uses the survey to assess the risks and to determine what exceptions from coverage must be included, known as Schedule B – Exception Items.

 

The Survey Coordinator’s role

Title and Survey are vital to any commercial real estate transaction, and our clients often have someone on their staff to oversee the process of obtaining an accurate and complete title commitment and ALTA Survey (and potentially other due diligence reports).  An equally key ingredient to a smooth closing is to have a strong Survey Coordinator with a team of professional, reliable surveyors.  A Survey Coordinator's role is not just to provide accurate surveys to the client, but also to keep items moving in a timely manner and to maintain a common balance between the surveyors out in the field and the clients.  ALTA Surveys are governed by a set of professional standards as written by the American Land Title Association and Amercian Congress on Surveying and Mapping.  Among other changes, the 2011 ALTA Survey Standards have restricted the amount of input a client may have in the outcome of a survey. For example, the surveyors are no longer permitted to use “client specified” certification language. It is also the Survey Coordinator’s responsibility to ensure the client receives a survey with all of their standard and selected optional requirements, set forth by the 2011 ALTA Survey Standards.

Challenges can arise when clients request certain items be placed on the survey that goes against the 2011 ALTA Standards.  While Survey Coordinators try to meet all of the client’s needs, at times this is a difficult task to complete.  Surveyors are generally more than willing to accommodate their client’s requests as long as they are within their contractual obligation and within purview of the 2011 ALTA Standards.  A strong Survey Coordinator will be able to find a way to satisfy the client and the surveyor’s responsibility without compromising the survey.

For more information on ALTA Surveys, check out Partner's free webinar: The Soup to Nuts of the ALTA Survey, airing this Wednesday the 22nd, 2pm eastern.  Click here to register.  *** For CA legal professionals: The webinar counts as 1 credit hour towards the California Bar Minimum Continuing Legal Education (MCLE) credit. 

For more on engineering on GlobeSt.com, check out Partner Engineering and Science, Inc.'s "Science of Real Estate" blog, which provides Thought Leadership positions on a variety of commercial real estate-related issues. Be sure to check out Partner's on-demand webinar on March 21 titled Engineering Returns Through Energy Efficiency.