DEAR AGENTS AND VALUED CUSTOMERS
In an ideal world, closing on your home would be as simple as signing on the dotted line, but in reality there is a lot to navigate in order to ensure a smooth settlement. This month’s newsletter covers why it's not always advisable to rely on the seller's existing survey and why you should obtain a new survey.
Sincerely,
Laura Bowers, Managing Director
I'm
saving my customer the cost of a new survey!
But are you really saving them costs? Below are two real life examples of what happened to buyers who relied on a seller's existing survey or they elected not to purchase a survey and the impact it had on them.
Buyer Bob Jones was a cash buyer. Bob's agent told Bob he did not have to purchase a property survey because he was paying cash and that would save Bob $350.00. Bob listened to his trusted advisor and elected not to purchase a survey. Fast forward 5 years after Bob purchased his home, Bob is now selling. The new buyer obtained a property survey and it was discovered there was an encroachment of the pool, deck and screened cage into a rear 5 foot easement. Under the terms of the contract, the buyer objected to this title defect and demanded Bob remedy the encroachment by vacating that easement so the new buyer would not have an issue when he went to sell and more importantly, so the new buyer was assured the county could not come onto his property and remove those encroachments. This cost Bob $10,000 between attorney fees and county application fees and delayed his closing by 12 weeks.
Betsy buyer was obtaining a loan for her purchase and her agent was able to get a copy of the seller's existing 5 year old survey so she could save Betsy $400.00. Betsy closed on her home and everything went well. Unfortunately, Betsy had to sell the home a year later when her Mother fell ill so Betsy could move closer to her Mother. The buyer of Betsy's home purchased a new survey and it was discovered that the neighbors fence and deck were encroaching onto Betsy's property. The neighbors had added the fence and deck after the date of the seller's old survey, so it wasn't apparent on the seller's old survey that these encroachments existed. Of course the buyer objected to these encroachments and Betsy had to go to her neighbors to ask them to remove the encroachments from her property but the neighbors put up a fight and didn't believe Betsy. It took several weeks after the neighbors obtained another survey confirming they were in fact encroaching upon Betsy's property and eventually they removed the encroachments, but it delayed Betsy's closing by several weeks. Meanwhile the buyer's rate lock had expired and it was going to cost them an additional $6,500.00 as a result and Betsy ended up having to pay for the buyer's additional mortgage costs due to this delay.
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To summarize, when a buyer is paying cash, they may agree to close without a survey, but as we learned in our stories above, it cost the buyer so much more in the end, and that could have been avoided had they purchased a new survey.
When a buyer is financing, the lender is going to require title coverage over survey matters, so a survey is required. As our second story demonstrates, relying on a seller's existing survey was not the best decision here.
Ensure you work with a trusted closing agent who reviews surveys closely and points out any and all survey matters to your buyers so they know if any encroachments exist and where easements are located so they know where they can and cannot build. Often times encroachments exist for minor things such as A/C pads, A/C's, pool equipment, walkways, driveways, and fences and those are quite common and typically do not pose any problems and most buyers just accept that they are minor in nature and accept them as is.
Should you have any questions about surveys or survey matters, please contact one of our trusted, experienced professionals at 941-552-5211.
