Quality of property title determines your exclusive ownership rights when you buy a house. The title has to be examined by your lawyer, and having the property surveyed is a part of that process.|
Lenders ask for surveys to minimize risk on loans. They want to be able to sell the house fast if the mortgage is not paid off. Therefore, they have to ensure there are no title defects which might prevent a smooth sale.
What Is a Survey
It's a document (and a process by which this document is produced) showing :
Survey results may influence your buying decision.
Precise dimensions of the land
Location of all structures, fences, driveways and
or rights-of-way, others may have over
If encroachments are discovered you will learn how serious they are and should discuss with a lawyer what can be done about
them. In case of an easement you can evaluate limitations on your ability to build new structures or plant trees.
Hopefully, your seller already has an up-to-date
survey. Otherwise, make your offer dependent on the current survey and negotiate who is going to pay for it.
New home buyers should have no problem to get a copy of the survey from the builder, provided they make a similar condition in the purchasing agreement.
Property Title Insurance
Title insurance is another approach to property sale closing, widely accepted by lenders in lieu of a survey.
The insurance provides protection against problems with
property title. It will cover expenses associated with repairing the title, or compensate owners if the property is lost.
Policy amount is based on the purchase price. Some policies are indexed for inflation.
Why to Have Insurance
Better Protection - You will have extra protection against losses suffered from fraud and title defects which property survey might not have discovered. Typical title insurance covers cases
| Someone's interest in the property|| Easements
| Covenant restrictions on property use|| Infractions of
municipal zoning and|
| Outstanding work orders|| Forged documents
| Errors in public records|| Fraudulently discharged mortgage
| Encroachment into neighbouring property|| False identity of the seller
Policy holders don't have to resort to expensive and lengthy litigations to recover a loss. Since liability is assumed by the insurance company, they can get compensated
through no-fault insurance claims. No-fault means that you don't have to prove negligence of the real estate lawyer who assisted you when your house was purchased.
Cheaper and Faster Closing - There is only one time insurance premium of up to about $300, depending on the property type and its price. It is far less than the cost
of municipal searches and a survey.
You can also count on a much faster closing - insurance application is a quick process when compared to time consuming
searches and surveys.
Add-On Features -
Some title insurance providers offer extra services to address the needs of home buyers who are on a tight budget. Such buyers can take advantage of a fixed cost closing service, so
they can plan their expenses more accurately without being caught short of funds on a closing day.
Another option is the deferral of a closing cost. Qualified buyers
(those who pass a credit check) can have their closing cost paid by insurance provider. It's a form of interest free loan at administrative expense of about $100 for six
months. When no interest term expires it has to be either repaid or gets converted to unsecured consumer loan.
Can I use an old survey
Up-to-date survey reflects the actual state of the property, i.e. no major changes were implemented after the survey was done.
For example, a new swimming pool not featured in your old survey makes the document already outdated.
Lenders may accept an old survey if your seller delivers an affidavit that nothing has changed since the property was surveyed.
What is not insured
Defects accepted by buyers
Government land rights
Native land claims
Do I still need a survey
Insured property title doesn't eliminate entirely the need for surveys.
When you want to build an addition to your house up-to-date survey will be necessary to obtain municipal permit.
If you sell the property you may want to have a survey to facilitate the transaction in case it is not title insured.