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Surveys in Commercial Transactions

08.26.11

Obtaining the appropriate survey for a commercial transaction is critical. The dollars invested and loaned in the commercial setting are generally far greater than in  the residential transactions. This means there is more to lose - both for the buyer and the lender - by failing to obtain a survey.

Obtaining a survey ensures your client's protection in any real estate transaction. A survey shows rights of way, easements, encroachments, access to public roads, boundary lines, drives and alleys, improvements, flood zones, and a conglomerate of other factors that are necessary to insure that your client is dealing with clean real estate. A current survey will be necessary to get title insurance that covers matters of survey.

Obtaining the appropriate survey for a commercial transaction is critical. There is more to lose in commercial transactions than in residential transactions due to the fact that the dollars invested and loaned in the commercial setting are generally far greater than in residential transactions. By obtaining a survey, it ensures the client’s protection in any real estate transaction. A survey shows rights of way, easements, encroachments, access to public roads, boundary lines, drives and alleys, improvements, flood zones, and a multitude of other factors that are necessary to ensure that your client is dealing with clean real estate.

Types of Surveys

  • Boundary survey: A boundary survey determines the property lines of an allotment of land described in a deed. It will also indicate the extent of any easements or encroachments and may show the limitations imposed on the property by state or local regulations.
  • As Built survey: The as built survey will show the location of all structures on the property as well as all visible encroachments, and any fences, hedges, or walls on or within five feet of both sides of the boundary lines. If there is visible surface evidence of utilities, then this will also be shown.
  • ALTA/ASCM Land title survey: This is the survey that you will most often need in a commercial transaction. An ALTA/ACSM survey is the most comprehensive type of survey that can be obtained. It will reflect all of the elements of the as built and boundary survey plus additional evidence of possession or use, which could be contrary to the interests of the purchaser or lender.


Title Insurance Issues

  • Current survey: The survey should be current. If it is not current then the title policy should limit its coverage as to the matters of the survey up to the date shown on the survey. Be sure to use the date when the last field survey was done and not a revision date. Review the survey to make sure it complies with the minimum requirements for an ALTA survey.
  • Gap Indemnity: You should always get the seller and buyer to sign a Gap Indemnity Agreement. This will assist the title insurance company in the event that there are any recorded liens or encumbrances between the date that your title search is good through the date of the insured deed.
  • “Marked” commitment: Most lenders in a commercial transaction will require a "marked" copy of the commitment. This simply means that you will prepare your commitment as usual but then "mark" it at the closing.
  • Endorsements: There are various endorsements to the title policy particular to matters of survey that may be requested or that you may want to recommend to your client, whether the client is the lender or the buyer.
     

If you would like to read more about surveys in commercial transactions, please view the document written by Kelly Anne Miles of Smith, Gilliam, Williams, & Miles, a Gainesville GA law firm.