Throughout my experience working as a real estate agent and mortgage consultant, I've found the worst loose end in most property transactions is the land survey.

The average residential property survey costs about $800 these days. I guess it's understandable that many real estate and mortgage deals are attempted with an out-of-date or incomplete survey, or even no survey at all.

A land survey is a detailed graphic description of a property and all its characteristics. In Ontario, "legal" land surveys can only be done by a certified Ontario Land Surveyor or O.L.S. and each survey bears a signature and seal.

The surveyor is not only concerned with physical ground based measurement, but also with verifying the extent of title the owners have to the land. Often, a surveyor's job is as much in the Land Registry Office as it is at the property.

The completed survey and report serve as a comparison between what is registered on paper and the actual physical evidence of the parcel of land. It provides a check that existing deeds have been prepared correctly as well as what the present boundaries really are.

In some cases, there may be no good markers indicating the lot lines. With some properties, lot dimensions are variable, such as a depth dimension that depends on the present high water mark of a lake or river.

The work the surveyor does is vital to ensuring that the purchasers know what they are buying and the mortgage company knows what is securing the mortgage loan. The purchaser's lawyer requires a survey to help verify the lot and concession or plan number. It is also necessary to determine whether all the structures are legally located on the property and whether there may be any boundary or right-of-way disputes.

The land survey is really the lynchpin of any real estate transaction. Without an accurate up-to-date survey, none of the other professionals that may be involved, such as lawyers, reals estate agents and mortgage brokers, can really do their jobs protecting the interests of their clients.

The only reason many people think they need a survey in a property purchase is because the mortgage company wants it as part of the applications. In practice, competition between lenders has led to almost routine exceptions to the requirement for a land survey not older that 10 years.

Occasionally, a lender might even accept a very old survey of the property accompanied by an affidavit from the owner stating that there have been no substantial changes since the survey was done.

I personally don't think this serves anyone's interests, though, and it puts all the future liability for any errors or oversights squarely on the seller's shoulder. Eight hundred dollars seems to be a small price to pay for that much piece of mind.

Who should pay for an acceptable survey if there isn't one? The seller or the buyer, whoever has agreed to it in the Agreement of Purchase and Sale. if there is no typed-in clause setting this out, then a preprinted clause in the Agreement of Purchase and Sale form (clause 11 in the Toronto Real Estate Board form) usually stipulates that the purchaser cannot ask for anything more that what the seller already has. That makes arranging for and paying for a new survey the purchaser's responsibility.

It is usually a good rule of thumb for the purchaser's house buying budget to include the cost of a new survey, just in case.

Purchasers have a vested interest in knowing what they are buying. A new survey, done to modern standards will usually show major landscaping elements such as fences, trees and shrubbery and resolve whether they are part of the property being bought, or really belong to the neighbours.

Whatever the situation, my feeling is that purchasers should not agree to buy a property until they know that they have or can get a current land survey.
 
 

YOU'RE ABOUT TO BUY A PROPERTY
Purchasing a home, cottage or other property can be a daunting experience, given the number of decisions that must be made in selecting and financing a property, particularly when the purchase of a property is dependent on the sale of an existing home.

One of the decisions that must be made in organizing such a purchase is whether to require a survey for full disclosure of the extent of title of the property, before the transaction, for ones own information and for financing approval, or to simply buy insurance against defects in title in order to get the release of mortgage funds.

To a degree, the choice depends on the type of property being acquired and the level of comfort purchasers would have in buying a home without a full understanding of the extent of their interests or of any potential disputes or problems regarding its use. It also depends on the type of assurance a lender may require before releasing mortgage funds.

A LEGAL SURVEY
Full disclosure of extent of title can be obtained through the purchase of a Surveyor's Real Property Report. This is comprised of a plan of survey and written report based on actual survey of the property and research into the title records for the existence of any easements, rights-of-way or restrictions that might affect the property. The survey plan shows the position of the building(s) on the site, the limits of occupation such as fences and hedges and any encroachments such as outbuildings, driveways, decks and retaining walls. The written report draws attention to any issues or potential problems discovered during the survey. The integrity of the Real Property Report is assured through the mandatory professional liability insurance carried by the surveyor.

The Real Property Report can be used to ensure that the buildings and improvements are sited in accordance with municipal by-laws. In combination with the lawyer's opinion of title, this report can be used to satisfy the lender that the property is marketable and suitable for mortgaging.

If the Real Property Report reveals problems with the title of the property or with the position of improvements such as fences or outbuildings, a purchaser could require the vendor to rectify the problems before closing the deal or might be able to negotiate a reduction in the purchase price to provide for the potential costs of rectifying the problem. One would also have the option, if warranted by the information revealed by the survey, to buy an insurance policy as additional protection.

TITLE INSURANCE, the alternative
A Title Insurance policy can be purchased, as an alternative to a Surveyor's Real Property Report, to insure ones lender or oneself against any loss occasioned by a defect in title or an adverse claim. The lender's interest is generally only exercised if a property is foreclosed and the lender is unable to market the property for the amount owing on the mortgage, due to a flaw in the quality or extent of title.

The property owner, if included as an insured party, is protected against loss if there is a claim against the property as a result of a flaw in title or an encroachment or similar circumstance. If there is a problem it generally remains undisclosed until a claim or action is begun, at which time the insured must demonstrate a financial loss in order to be compensated. Loss of enjoyment is not normally compensated as there may be no monetary value associated with such loss.

NEW HOMES AND OLD HOMES
When one buys a newly constructed home in a subdivision, the builder will have had a survey made of the building or its foundation during the construction of the building, as part of building permit requirements and to ensure that the building has been sited in accordance with the municipal by-laws. This plan of survey is normally part of the disclosure material provided to the purchaser prior to closing and is sufficient for the purposes of acquiring a mortgage. Similarly, the research and opinion of title provided by the purchaser's lawyer is sufficient assurance of the quality of title.

In such a case a purchaser would have little need of either a new Surveyor's Real Property Report or Title Insurance.

In the case of resale homes, circumstances and the running of time make the need for a survey or title insurance more compelling. The first survey, made for the builder when the building was under construction on an unimproved lot, will not show the fences, hedges, outbuildings, additions, decks and other features that may have been added over time. There is no assurance, in relying on the survey of the foundation made during construction, that the present occupation and use of the property conform to the by-laws of the municipality or are entirely consistent with the extent of ownership. Only a survey and report in the form of a Surveyor's Real Property Report and a review of title by a lawyer can assure a purchaser that there are no potential problems or contentious issues that need to be resolved.

A Title Insurance policy provides no information to the purchaser of a property about specific details of the property, although the insurer will have had access to a lawyers report and may have had a cursory inspection of the property made, before issuing the policy. If there are potential problems, the insurer may require a survey be undertaken or may exclude the potential problem from coverage.

CONSIDERATIONS
Cost - A Surveyor's Real Property Report may cost more than a Title Insurance policy, depending on the type and value of the property - A Title Insurance policy is usually purchased to cover the term of a mortgage, and must be renewed, for an additional premium, each time the mortgage is re-negotiated or renewed.

Disclosure - A Surveyor's Real Property Report discloses all pertinent information about the boundaries of the property and the extent of occupation, the location of easements or rights-of-way, if any, and the possibility of adverse claims through long standing adverse occupation or encroachments. A Title Insurance policy does not disclose any information about the property, but insures against demonstrated loss, if such occurs.

Caveat Emptor - A purchaser can be forewarned, by a lawyer's opinion of title and a Surveyor's Real Property Report, if there are problems with the quality and extent of title before completing a purchase and can requisition remedies to the problems, if any, before closing the transaction. A Title Insurance policy, which is issued by an insurer on the basis of a lawyers report without reference to an up-to-date survey, does not provide any information about a property to an owner or lender. Any problems that might have been revealed by an up-to-date survey are often excluded from coverage and are passed on to the uninformed purchaser or lender, to be resolved by them at a later date.

Future Use - Where a home buyer intends to make improvements on a newly purchased property, such as erecting or renewing fences, extending the building or adding out-buildings or decks, a survey would be required for either locating the property limits or for acquiring a building permit. Having the vendor provide the survey before closing the transaction aids in the transaction and provides the information needed for future projects on the property.

Peace of Mind - Your decision on the course of action you propose, from full disclosure about the new property to simply insuring your mortgagor against loss in the event of problems, is a personal choice. We believe that prudent purchasers should get as much information as possible about a prospective purchase before committing their funds, for their protection and peace of mind.
 
 

Many a home buyer has been miffed by the requirement for a building location survey and few understand how much it contributes to the buying and selling transaction.

Still others will become annoyed when told by their lawyer or their mortgage company that a deal can't go forward until a building location survey is done. In standard real estate transactions, the lawyer's job is to examine the title and to give an opinion on the quality of that title. "Title" refers to the legal right of ownership in property as reflected in documents registered in the Ontario Registry System.

When a mortgage lending institution is involved, the lawyer normally must provide it with this opinion as well. The opinion will be based a review of the title documents, especially in relation to the agreement of purchase and sale and on a review of the reports from several municipal, provincial and, occasionally, federal government offices.

The other important aspect of title that must be reflected in a lawyer's opinion is the "extent of title" - that is, how well the description of a property as recorded in the title documents matches the actual layout of the property. For this, lawyers rely on the expert drawings and written reports of Ontario Land Surveyors. The drawing and report, traditionally referred to as a "building location survey," make up what is called a Real Property Report. A proper survey contains the drawing a surveyor prepares showing the results of his or her findings at the house site. It will also show any features that have been specifically requested. A survey should also comment on any abnormalities revealed by the surveyor's research and work at the site. The rules and regulations under which qualified surveyors operate require them to draw attention to all problems and issues found during their research.

Without an up-to-date survey a lawyer cannot provide an opinion about the lot size, access to the property, encroachments of any structures on or from neighbouring properties, the precise location of easements or rights-of-way additions, alterations, or subtractions such as road widenings, expropriations or partitions, possible Planning Act violations, shore lines, and other problems that may only become apparent when revealed by a survey. Without a survey, a lawyer cannot compare the actual dimensions of the property with municipal zoning requirements.

Armed with a Real Property Report, the lawyer has the information to give an opinion regarding violations of municipal bylaws, rights-of-way, encroachments and the like. All of these will be shown on the survey and will affect the quality of the title the buyer will be getting.

Most agreements of purchase and sale give the buyer's lawyer time to search the title to ensure the buyer won't inherit any surprises. Without an up-to-date survey, the lawyer's task will be severely constrained. It's prudent, therefore, to find out before signing the agreement whether the seller has a survey and if not, to allow the buyer to factor the additional cost of having one done into his or her bargaining objectives.

In many new home transactions, the builder's standard agreement of purchase and sale will make provision for supplying the buyer with a survey, but often it will be silent on this issue. In all such cases, the buyer should ensure that the agreement is amended to require the builder to provide a Real Property Report.

Be aware that the only survey a buyer can rely on is one bearing the embossed seal of a qualified surveyor. A photocopy is worthless.

Many agreements of purchase and sale in resale transactions are amended by including the provision that the seller shall provide an "up-to-date" survey of the property. Real estate agents and lawyers will often consider "up-to-date" to be a function of how old a survey is; the only true measure is whether there have been any changes to the property since the survey was prepared. A survey prepared a month ago for construction purposes will not be "up-to-date," where a 30-year-old survey may be if there have been no changes to the property.

In almost every home purchase, an up-to-date building location survey should be obtained. When you compare the cost of a survey against the price of the house you are buying, you will normally discover it to be well below one per cent, making a survey an inescapably good value.

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