June 4, 2025
Gaithersburg, MD--Whether purchasing a townhouse, a single-family house, a farm or even a strip shopping center, the buyer will be asked whether they want a survey of the property lines. In the past, this was an easy question and buyers routinely answered that yes, indeed, they did want a drawing of the property lines, the location of the house, fences, the deck and the shed.
In some States, it is quite common that a survey is required for settlement. Normally, the settlement company will order the survey. This survey drawing will reveal whether any fences encroach upon the neighbor’s property or vice versa, and whether the house and other structures are within the property lines. The survey may also reveal if any portion of the house or other structures have been built over any building restriction lines.
Recently, however, some of the rules of the survey requirements have changed as it relates to ordering a survey While in the past, a lender always required a survey, many people did not understand why. The reason was because the lender did not want their title insurance policy to take exception to (or not cover) matters that would have been discovered had a survey been provided. However, the title insurance industry has modified the rules and in most residential transactions, the title insurance industry is willing to remove the survey exception in the Lender’s policy, so long as the sales price is under a certain amount or the acreage is less than a defined amount. Also, the seller/owner of the land is required to sign an owner’s affidavit that they have no knowledge of any property line disputes, encroachments or other survey related problems. This is important to understand, because if a Lender states that they do not require a survey, they may be saying this because they know that their title insurance policy will still protect them if a survey related claim arises.
On the other hand, a buyer has a different interest in the property than the Lender. There may be some obvious problems that will be revealed if a survey is ordered. For example, the fences may not follow the property lines, a shed or driveway may be built over the property lines, the swimming pool may have been wrongfully constructed in the middle of the septic field or part of a house addition may have been constructed in an area that was not permitted, such as over a property line or a building restriction line. While none of these issues will necessarily be of concern to a lender, because their mortgage is still valid, the issues are certainly important to a buyer.
In residential transactions, there are two types of surveys, and they are known by various names. A basic house location survey is less expensive and will give the buyer a general drawing of the property lines, the location of the house, the fences, the sheds and other improvements on the property. However, the level of accuracy is not precise, as the surveyor will not be using the sophisticated tools that they otherwise use on the more advanced survey.
However, the basic survey is cost effective and will usually reveal the type of problems that buyers are concerned with.
The more advanced survey is often called a boundary survey or a stake survey. With this type of survey, the surveyor will indeed bring out the sophisticated equipment and will literally mark the corners with a buried metal pole or rod, and a wooden stake above ground. These surveys are usually accurate within inches and can be a very valuable tool for the buyer. If the buyer is considering installing a fence after settlement, then this type of survey would be extremely important to obtain. Of course, the stake survey is a bit more expensive than the basic survey drawing, but it is undoubtedly worth the price when one considers the cost of moving a brand-new fence that was improperly installed because the new owners just guessed where the property corners might be.
For commercial transactions, lenders and buyers often require an ALTA/NSPS survey. This name is short for an American Land Title Association/National Society of Professional Surveyors drawing. This drawing is remarkably detailed and shows all improvements, easements, boundary lines and some ALTA surveys will go as far as depicting every sewer drain cover, light posts, trees, curbs, gutters and overhead wires. For a complex or high dollar transaction, such as an office building, shopping center or warehouse facility, it is extremely likely that the lender will require this type of survey. They can be time-consuming and expensive, so buyers involved in this type of transaction should check with their lender early in the process to see what is required.
As a final note, buyers should understand that finding out that the fences do not follow the property line, or that the shed is built over the property line is something that is much easier to address before settlement, as opposed to after settlement when title has already transferred. While it may save the buyer several hundred dollars to opt out of the survey, it will undoubtedly cost much more to clean up a problem that is discovered after settlement. Thus, if the buyer is in a State where the survey is considered optional, buyers must carefully consider whether they want to take a chance by waiving that option.
David Parker is an attorney and the Managing Director of Village Settlements-an Atlantic Closing and Escrow Company. His columns have appeared regularly in local newspapers, magazines, and newsletters. He is the co-author of the book, “Real Estate Practice in DC, Maryland and Virginia.” If you have a topic that you would like him to write about, he can be reached at dparker@villagesettlements.com
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