Quality of property title determines your exclusive ownership rights when you become the owner of a house. The title has to be examined by your lawyer, and having the property surveyed is a very important 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.
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| What Is a Survey |
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It's a document (and a process by which this document is produced) showing :
 Precise dimensions of the land
Location of all structures, fences, driveways and adjacent roads
Easements or rights-of-way, others may have over the property
Property encroachments
Survey results may influence your buying decision.
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. |
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
the title of
the property. It covers expenses associated with repairing the title, or compensates the
owner if the property is lost.
Policy amount is based on the purchase price. Some
policies are indexed for inflation.
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| Why to Have Insurance |
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 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
of :
| Someone's interest in the property | Easements
| | Covenant restrictions on property use | Infractions of
municipal zoning and bylaws | | Outstanding work orders | Forged documents
| | Errors in public records | Fraudulently discharged mortgage
| | Encroachment into neighbouring property | False identity of the seller
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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 ?