ARTICLES

An up-to-date survey provides purchasers with a visual representation of their property, indicating items such as lot dimensions, house location and outbuildings on the lot, encroachments onto and out of the lot, fences, significant landscape features, easements/rights of way and setbacks.

While a survey informs and provides homeowners a picture of the physical property, it does not always provide a remedy should there be unknown adverse survey matters which cause a loss in the future. Title insurance for residential properties is designed to compensate insureds for covered losses which include the land becoming unmarketable due to adverse matters that would have been disclosed by an up-to-date survey.

Even if a new survey is obtained, there are benefits to obtaining the survey coverage found in a residential title insurance policy due to the ability to underwrite disclosed survey defects.

Benefits of a title insurance policy vs. survey

1. Most properties do not have an up-to-date survey, leading to additional costs that purchasers must incur in order to satisfy lender survey requirements. The majority of lenders accept title insurance in lieu of an up-to-date survey, with the cost of title insurance being a fraction of the average cost of a survey, which can range from $500 to $1,200.
2. Even in cases where an existing survey does exist, there is no guaranty that it represents the state of the property at the time of the transaction. Furthermore, subsequent purchasers have no rights against the surveyor who prepared it, in the event that it is incorrect.
3. Surveys obtained on new home transactions usually show only the building foundation and not improvements.
4. Title insurance survey related coverage is “no fault” based. This means that if a loss occurs which is covered under the policy, compensation will be provided without the need to take legal action against the surveyor.

Survey coverage highlights for homeowners in a residential title insurance policy

 Someone else owns an interest in your title
 Someone else has an easement on your land
 Your land is unmarketable because of an adverse matter which would be disclosed by an up-to-date survey or it violates an existing zoning by-law
 You are forced by a governmental authority, affected neighbour or party who benefits from the easement to remove or remedy your existing structure(s) other than a boundary wall or fence, because it extends on to adjoining land or on to any easement or because it violates an existing zoning by-law or ordinance.

All coverage relates to the improvements existing at the policy date. A residential owner policy contains some post policy survey related coverage in that the insured can be compensated for losses related to an adjoining owner constructing improvements (other than boundary walls or fences) which encroach onto the insured’s land after the policy date.

Both residential owner and lender policies provide broad protection to homeowners and lenders for a wide variety of survey related issues. Nonetheless, there are circumstances where homeowners are best served by obtaining a survey as well as a title insurance policy. This is particularly beneficial in cases where the homeowner anticipates future construction to improve the property.

Photo courtesy of ell brown