Lenders often require an ALTA survey* in connection with their financing of a real estate purchase. However, even if the purchase is not being financed, or the lender doesn’t require an ALTA survey, every buyer of commercial property should strongly consider having one done.
Why? Here’s just a few of the reasons:
- Verification of the legal description. The ALTA survey will be based on the legal description as reflected on Schedule A of the title insurance commitment. It will show the property boundaries as they would appear on the ground, including any appurtenant easements being acquired for parking, access or off-site utilities. With survey in hand, a buyer and his lender can determine whether the boundaries as depicted on the survey coincide with what is actually being purchased, and any errors or discrepancies can then be dealt with prior to closing.
- Location of easements and other encumbrances. Schedule B-2 of the title insurance commitment will list easements and other encumbrances that were identified during the record title search and affect the property. Without an ALTA survey, the impact of those items can be difficult to assess. The ALTA survey will show the location and width of all easements and encumbrances listed on the commitment. In addition, the survey will reveal easements that are apparent from a visual inspection of the property but were not listed on the title insurance commitment, such as unrecorded easements or easements that were recorded prior to the starting point of the title search.
- Identification of improvements and encroachments. The minimum standard detail requirements for ATLA surveys require the depiction of all buildings located on the property. Additional detail about buildings (e.g. exterior dimensions, square footage, building height) and the location of other improvements (e.g. fences, parking lots, signs, landscaping) can also be shown by selecting optional Table A items. With this information, a purchaser or lender can assess whether any buildings or other improvements encroach over the property’s boundaries or onto any easements.
- Verification of access. Vehicular access is critical to every commercial property. The standard title insurance policy only insures “legal access”, which does not equate to “vehicular access.” The ALTA survey is required to show all adjacent streets, roads, alleys and highways. The survey will show if there is direct access to the public street or if access is by easement across someone else’s property. The location and width of all curb cuts and any impediments that might exist to vehicular access will also be shown. With this information, the purchaser can determine whether the available access will be sufficient, and the title insurance company will be able to issue a special endorsement ensuring vehicular access.
- Compliance with local zoning ordinances. Selection of some of the optional Table A items (e.g. zoning classification, building height, number and size of parking spaces, lot area, building coverage, set backs) can provide the purchaser with information to assist in determining whether the property complies with local zoning ordinances.
- Utilities available to the property. In many transactions, it is important to ascertain whether the property has available utilities sufficient to serve the intended use. This determination can be aided by an ALTA survey with the selection of certain Table A items. If Item 11a of Table A is selected, the survey will show evidence of utility service to the property, whether on the property or in the adjoining public right of way, including available water meters, sewer manholes, cable boxes, overhead lines, fire hydrants, utility poles and gas valves, among others. Item 11b will require that the survey show approximate locations of underground utilities.
- Enhanced title insurance. The availability of enhanced title insurance is probably the top reason ALTA surveys are obtained. The ALTA survey will allow the title insurance company to eliminate the “survey exception” on the policy, which excludes from coverage any items that would be discovered by a survey. In addition, the ALTA survey will allow the title insurance company to issue endorsements to the policy providing coverage against items not insured in the standard policy, such as lack of access, zoning violation, encroachments and contiguity.
*An ALTA survey is a land survey performed to the standards adopted by the American Land Title Association (ALTA) and the American Congress on Surveying and Mapping (ASCM). The standards, formally known as the as the “Minimum Standard Detail Requirements for ALTA/ACSM Surveys”, were first adopted in 1968 and last revised in 2011. The ALTA standards include minimum standards that must be included on all ALTA surveys as well as optional “Table A” items that can be selected for inclusion. The standards can be found at www.acsm.net and www.alta.org.
