The Importance of Surveys and Survey Riders in Real Estate Transactions

When making a real estate purchase, every potential homeowner knows the value of getting a home inspection. But there's another type of inspection that's equally essential, though perhaps not as well-known: a property survey. And for the protection that a survey provides, a Survey Rider is also critical to be included in your title policy. Today, we'll unpack these terms and discuss why they play a pivotal role in the real estate process.

Understanding Property Surveys

In the simplest terms, a property survey is a detailed inspection that determines the boundaries, size, location, and potential easements of a piece of property. But more than that, surveys provide an overview of what is on the property, such as buildings, fences, driveways, and other structures.

The results of this survey can dramatically affect the transaction process, the value of the property, and even future potential developments. A survey helps to mitigate the risk of boundary disputes with neighbors, reveal if any part of your property (like a shed or garage) is encroaching on someone else's land, or vice versa, and determine if your property is within a flood zone.

Why is a Property Survey Important?

1. Establishing Boundaries: Property surveys are the definitive way to establish property lines. Without a proper survey, you could inadvertently find yourself in a dispute with a neighbor over where your land ends and theirs begins.

2. Identifying Easements and Encroachments: A survey identifies easements that may exist, providing certain rights to others to use your property in specific ways. Encroachments, such as a fence built beyond a property line, are also identified in a survey.

3. Future Developments: If you're planning to add a pool, a fence, or an addition to your home, you need to know precisely where your property lines are. A survey will provide this information, keeping you safe from potential legal issues later.

4. Property Value Determination: Understanding the exact size and layout of your property can impact the overall value of the property, which can be crucial during both the purchase and the potential resale in the future.

What is a Survey Rider?

A survey rider, also known as a survey endorsement, is an addition to your title insurance policy. Title insurance protects you from problems or claims that may arise related to the property's title - such as liens, forgeries, undisclosed heirs, etc. However, standard title insurance policies do not cover everything, including discrepancies that could have been revealed by an up-to-date survey. This is where a survey rider comes in.

Why is a Survey Rider Important?

A survey rider extends the coverage of your title insurance to include any survey-related issues that might come up in the future. If your survey fails to disclose certain issues that later come to light - like an encroachment or an incorrect property boundary - a survey rider on your title policy will cover you.

1. Protection Against Undisclosed Issues: A survey rider provides protection against issues that a standard title insurance policy does not cover, such as discrepancies between the legal description of the property and the survey's findings.

2. Financial Coverage: If issues arise after the purchase of the property relating to the survey, a survey rider offers financial coverage to resolve these problems, saving the homeowner potential costs.

3. Peace of Mind: Perhaps the most invaluable aspect of a survey rider is the peace of mind it offers homeowners. Knowing you're covered against potential unknown issues allows you to enjoy your property without worrying about potential disputes or financial burdens related to your property's survey.

Who Pays for the Property Survey?

When it comes to the property survey cost, practices can vary greatly based on local customs, market conditions, and negotiations between the buyer and seller.

In many cases, the buyer pays for the property survey. There are several reasons for this: firstly, the buyer's lender may require a survey before approving the mortgage loan, making it the buyer's responsibility to fulfill this requirement. Secondly, since the buyer will be the property's new owner, they usually have a vested interest in knowing the property's precise boundaries and any potential issues.

However, in some situations, the seller might agree to pay for the property survey as part of the negotiation process. For example, if the seller is keen to close the deal quickly or if the local market conditions heavily favor the buyer, the seller might decide to bear the cost to make their property more attractive to potential buyers. In other instances, the cost may be split between both parties as part of the negotiation.  If the seller has a previous survey, and there haven't been any additions to the property, the seller can notarize a T-47 and give both to the title company.  The title company can look at both forms and determine if the old survey is acceptable to use.  

It's important to note that this is a point of negotiation, and it should be explicitly stated in the purchase agreement to avoid misunderstandings later.

In conclusion, while property surveys and survey riders might seem like just another item on an already long list of things to handle during a real estate transaction, their importance cannot be overstated. They play a vital role in defining your property rights and protecting you from future legal and financial headaches. So next time you're in the thick of a property purchase, remember the value of a thorough survey and the protection of a survey rider. As the old saying goes, "an ounce of prevention is worth a pound of cure" - especially when it comes to your home.