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In a prior post, I wrote about the need for surveys in real estate transactions (see post HERE). I can’t emphasize this need enough.  I started that post, however, with the premise that clients look for ways to save money, sometimes, and I emphasize sometimes, there is a way to save money on the cost of the survey by updating and recertifying the prior or an existing survey.  To do this, you need to first obtain a prior survey from the seller.  This is not always an easy task.  In residential transactions, for example, sellers aren’t usually very good about keeping their paper work together in one place.  Finding old commercial surveys is easier.

But just because you have a prior survey doesn’t mean you can have it updated or that an update will be cost efficient. If the prior survey is relatively new, the surveyor should be able to go back to the property to confirm the boundaries and that there are no new improvements.  The surveyor will review the new title work and re-certify the survey at a cost which is less than the cost of a new survey.  Keep in mind that this cost may be nominal for residential surveys as residential surveys aren’t terribly expensive.  But on larger, commercial surveys, the cost difference could be significant.

If the survey is several years old of if you know or suspect there have been new improvements to the property since the date of the prior survey, then a new survey will be required. The surveyor will have to do field work to confirm the boundaries and locate the improvements.  If a full ALTA survey is required, monuments and corners must be located and set so it is unlikely that an update will be possible.

Survey updates can also save time. This is important in those instances when you have to close on short notice.  But if a new survey is required, delaying closing to allow time to obtain the survey is the better course.

Survey updates are useful and great tools in the right circumstances. When you can use them, the cost saving is an added benefit.

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There comes a point in every purchase transaction, residential or commercial, when a buyer receives a title commitment or ta title report, setting forth the status of title to the property being purchased. This is the moment when we know whether there are unforeseen problems that have to be addressed before closing, or whether we have to delay closing or sometimes, terminate the contract.  Generally, buyers don’t see the commitment or leave it to their attorneys to sort through the issues.  Frankly, this isn’t the worst practice to take.  Buyer’s, developers and investors have plenty to focus on to get to the finish line, whether it is moving, financing, construction issues, leasing or a myriad of other issues and title is technical.  There is little that the buyer can do to solve the problems that might arise.  But, it isn’t a bad idea to know wat are some of the things to look for in reviewing a commitment.

In a previous post, I have given a complete overview of title insurance (see post HERE).  But that was more of a technical look at title insurance.  Practically speaking, the review of a title commitment is very simple.  A commitment comes in 3 parts.

  1. Schedule A – This is the cover page of the Commitment. It tells who will be insured (owner and lender), the amount of insurance, who currently owns the property and the estate or interest of the land to be insured. All of this should be checked for accuracy. The legal description of the property to be insured is also referenced and attached on an exhibit. The legal should be compared to prior deeds, policies and surveys.
  2.  Schedule B-1 – This is a “checklist” of items that need to be completed in order to issue the final policy. Most of the items on this schedule will have to be done by the Seller (ie: pay off the existing mortgage, pay outstanding taxes and liens, provide authorizing resolutions). But, some will have to be provided or performed by the Buyer (authorizing resolutions to execute the mortgage, satisfy judgments against the Buyer). Buyer’s attorneys check to see what their clients must provide and make certain that Sellers deliver what they are supposed to.
  3. Schedule B-2 – This is the meat of the Commitment. It contains all of the exceptions to Buyer’s (and Lender’s) title that will appear on the final policy. Each of the exceptions must be reviewed to determine whether any affect or restrict Buyer’s use, or intended use of the property, create any unforeseen obligations for the Buyer such as assessments or 3rd party lien rights, or create easements or other rights which impact Buyer’s use or enjoyment of the property. Copies of easements should be provided to Buyer’s surveyor to be located on the survey so Buyer can assure that the easements don’t unreasonably interfere. This review of Schedule B-2 can’t be accomplished without reviewing each of the documents referenced on B-2.

 

No one should simply accept a Title Commitment as presented.  Every Commitment should be carefully reviewed and considered. Even matters that seem inconsequential at the time of purchase could have a big impact down the road.  It is important to consider whether exceptions are proper for the particular property and whether they could have an adverse impact now or a later date.   Resolution of these matters before closing is cheaper, and perhaps at the Seller’s or title company’s cost.  Waiting until a problem arises after closing will assure that the cost is on the Buyer.

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    Welcome to Assouline & Berlowe’s Florida Real Estate Law and Investment Blog with news, insights, and commentary for investors, developers, and their advisors.

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