Should Buyers Order a Survey?
Many people are uncertain whether to order a survey when they are purchasing a home in St. Louis, Missouri. The sale contract includes a Survey Contingency allowing buyers the option to order a survey, at their own expense, typically within 25 days, and work with the seller to resolve any issues. By conducting a survey, you can determine the precise location of your property boundaries and identify any encroachments. This information is vital as it helps prevent future legal disputes and ensures you are aware of any potential issues before finalizing the purchase. If an encroachment exists, it can be addressed through legal means such as obtaining an easement deed to establish the rights and responsibilities associated with the encroachment. One essential step in this process is ordering a survey. A survey is a detailed examination of a property's boundaries and features, performed by a professional surveyor. It provides valuable information about the property, such as the exact location of its boundaries, improvements (e.g. driveways, structures, fences, trees), and potential encroachments.
It's important to note that a survey determines where improvements and features are located, but not who owns them, which is one of many reasons you may find it’s necessary for the seller to have a discussion with their neighbor on your behalf. Before we look at the benefits of ordering a survey in more detail, let’s learn how the survey contingency works.
The Survey Contingency
1. Surveys are optional
Neither your lender nor the title company will require a survey, leaving the decision completely up to you. If you intend to build any new structures (fence, pool, garage, etc) it would be prudent to order a survey since you’ll need it for your future project, and doing the survey during the purchase process allows you the opportunity to negotiate with the seller regarding any issues. You may do a survey after you close on your new home, but understand that any issues discovered at that time will be yours to resolve.
The cost for a survey is based on the size of the lot and is typically between $450-$700.
2. The Survey Notice
If the survey uncovers shared elements (e.g. a driveway) or encroachments (e.g. neighbor’s fence is on your property) which are unacceptable to you OR adversely affect the use of the property, you may serve the seller with a Survey Notice.
This notice stipulates how you’d like the seller to resolve the issue and that they do so at their expense.
If the seller does not agree within 5 days, the contract is automatically terminated unless the buyer, within 2 more days, agrees to accept the property in as-is condition.
3. The contract protects you
If the seller does not agree to satisfy the buyer’s request in the Survey Notice, and the buyer does not agree to accept the property with the uncorrected survey defects, the buyer’s damages are limited thanks to the following clause in the contract:
If the contract is terminated in the accordance with the provisions in this paragraph, Buyer’s earnest money is to be returned and Seller agrees to reimburse Buyer’s costs to pay for title, survey, inspection(s), and appraisal.
Ownership & Encroachments
One of the key advantages of obtaining a survey is the ability to clarify ownership and identify potential encroachments. An encroachment occurs when a structure, improvement, or feature on one property extends beyond its boundaries and overlaps onto a neighboring property. This could include a fence, driveway, shed, or even parts of the main dwelling and lead to ownership disputes pertaining to the feature, the land, or both.
Boundary Coverage and Title Insurance:
Another significant benefit of ordering a survey is that you may receive additional protection pertaining to your property boundaries. Title insurance protects you against any potential defects or issues with the property's title, which could include boundary disputes. When you have a clear and accurate survey, your title insurance will also include boundary coverage. This coverage offers you protection against any future claims related to the property's boundaries, in which case the title company and their attorney would be tasked with resolving the claim. Without a clear survey and resolution of encroachments, boundary coverage will be excluded from your policy. If you elect to perform a survey after your home purchase is complete, and it’s clear or discovered issues are resolved, boundary coverage can be added to your title policy at that time and usually at no additional charge.
Risks Associated with Shared Improvements:
Sharing a fence or other improvements, such as a driveway or retaining wall, with a neighbor can present risks and potential conflicts. Without a survey, it can be challenging to determine the exact ownership and maintenance responsibilities for such shared structures. Disputes over land ownership, maintenance costs, or the right to make changes can arise, causing stress and financial strain.
This can be resolved when an easement deed is signed by the two respective property owners and recorded with the local municipality at closing. An easement deed is essentially a permanent permission slip allowing the shared or encroaching structure to remain in place while clarifying (1) whose responsible for ongoing maintenance, (2) who owns the structure and the land on which it rests, and (3) what happens if that structure is taken down and/or rebuilt in the future. Easement deeds live on into perpetuity which permanently resolves the issue for the current and future owners of both properties.
Keep in mind that if you elect not to perform a survey, issues may be discovered in the future when you or your new neighbors sell your homes, at which point the buyer may discover encroachments and negotiate for resolution.
Obtaining a survey allows you to have accurate discussions with your neighbor(s) about shared improvements, reduces the likelihood of conflicts in the future, and establishes clear responsibilities for maintenance and future modifications. Nonetheless, many buyers decide the perceived risk of encroachments and related issues is low enough that they’d prefer to proceed without a survey and instead spend that money on new furniture or planned improvements.
There is no right or wrong way to handle this situation, but you will only receive full and total clarity if you order a survey.
Conclusion
Ordering a survey is highly recommended when buying a home, especially if you plan to erect or replace a fence, or build any new structure. While ordering a survey is not mandatory, it offers numerous benefits and can save you from potential legal complications and disputes down the road.
By obtaining a survey, you can clarify ownership, identify encroachments, and establish boundaries accurately. Additionally, a clear survey enhances your title insurance policy with the addition of boundary coverage which protects you against future claims.
Investing in a survey ensures that you have a comprehensive understanding of the property's features and potential issues, giving you the confidence to proceed with your purchase. Ultimately, it's a valuable investment that can help you make informed decisions and enjoy your new home with peace of mind.
To learn more about the purchase process and contingencies contained within the St. Louis Association of Realtors Residential Sale Contract, visit my page about the Home Buying Process in St. Louis, Missouri.
