What Property did you Think you Were Buying?
LOS ANGELES—EVP for acquisitions calls her favorite lawyer: “We’re buying Three Rivers Shopping Center, so get going on due diligence.”
Favorite lawyer immediately calls title company: “I need a title report on Three Rivers Shopping Center, ASAP,” and surveyor: “I need a survey of Three Rivers Shopping Center, ASAP.”
In due course the title company produces a title report naming the owner, giving an eight-page metes and bounds property description indecipherable to normal humans, and a list of covenants, easements and liens affecting the property. Soon thereafter, the surveyor produces a survey showing many parcels of land, the buildings located on them and plots of the various easements affecting those properties.
How do the lawyer, the title company and the surveyor know that the property described in the eight-page property description is the same as the property shown on the survey? How do all three of them know that that property is the same thing as EVP for acquisitions meant when she said she was buying Three Rivers Shopping Center?
More often than you’d think, they don’t. As a result, either too many or too few parcels of land get conveyed, resulting in embarrassment, financial loss, and sometimes lawsuits against lawyers, title companies and surveyors.
Even though the eight-page metes and bounds property description is very hard to read by those untrained in deciphering property descriptions--“commencing at a point in Franklin Street distant 342.06 feet easterly of the northwest quarter corner, thence N76°44’32”W 26.77 feet, thence S13°15’28”W a distance of 531.06 feet more or less, thence . . .”—any good proofreader can usually confirm that the description in the title report is the same as the land shown on the survey, because the survey also contains a description of the property shown thereon, and so that description should exactly match the one in the title report.
Sometimes they don’t, because the same parcel of land can be described in several different ways. If the descriptions don’t match, the surveyor should be asked to confirm that they both describe the same parcel of land. And, of course, sometimes they don’t actually describe the same parcels of land. The parties’ lawyers, the title company and the surveyor should all take the time to confirm that the land in the title report is the same as the land on the survey.
The next step, too often taken for granted, is confirming that the land in the title report and survey are actually the land the parties intend to transfer—no more and no less. The parties’ lawyers and the EVP of acquisitions (or her designee) need to compare the property shown on the survey to the actual property in the field, or site plans for the property, Google Earth, or some other version of reality to ensure that the buyer is getting what the buyer is expecting to buy and the seller is selling what it is expecting to sell.
Tom Muller is the co-chair of the land use and real estate practice at Manatt, Phelps & Phillips, LLP. The views expressed in this column are the author’s own.
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