In today’s difficult market, real estate professionals are looking for new ways to save money and cut transaction costs. Given this goal, cheaper products are being pitched as ALTA/ACSM Land Title Survey alternatives. Before choosing one of these products, a real estate professional should be cautioned to have all the facts and determine if these products add value to the transaction before purchasing.
The best way to review the usefulness of these products is to analyze what they are not and what they cannot do.
These survey alternatives are not land surveys and it should be noted that their vendors do not purport to pass them off as surveys. ALTA/ACSM Land Title Surveys are surveys prepared under the stringent requirements of the American Land Title Association and the American Congress on Surveying and Mapping. The ALTA/ACSM Land Title Survey 2005 Minimum Standards were designed to be the “minimum” standards designed to satisfy the needs of lenders and title companies in connection with a commercial real estate transaction.
These alternative products are summary in nature, typically based on a review of an aerial photograph and intended to provide information; however a sophisticated buyer, attorney or Title Company can obtain the same information from public records. Aerial photographs (satellite imagery) are typically not spatially accurate and contain significant error. They do not account for atmospheric conditions and the curvature of the Earth. In more rural areas in which aerial photography has not been captured, it may not be possible to obtain a useable aerial photograph of certain properties. Even in more urban areas, aerial photography is only updated every five years, if not longer. Therefore, there could possibly be significant changes to a property that would not be identified without a site visit or site survey.
Since these products are not surveys, they cannot be used to obtain survey coverage from a Title Company. ALTA/ACSM Land Title Surveys are normally ordered along with a Commitment for the Issuance of a Title Insurance Policy and used along with the title commitment in order to insure a lender or buyer against matters that would have been shown by the survey. Title Companies require an ALTA/ACSM Land Title Survey or update for most commercial transactions.
Alternative survey products are not prepared or certified by a professional. State laws mandate that surveys must be prepared by licensed professional land surveyors. The certification language of a survey is a very important part of the process and along with the surveyor’s E&O insurance policy provide the certified parties with a strong level of protection and comfort. They do not confirm the legal description, verify the boundary, identify the property corners, and accurately locate the improvements, easements, restrictions and other record matters. They do not disclose any gaps, gores or overlaps.
Given the list of things these products are not, we are left with asking, what are they? Other than being cheaper than an ALTA/ACSM Land Title Survey, not much. I anticipate that some state survey boards will step in and determine that these products violate state laws regarding professional licensure. Even in this difficult economic climate, spending the extra money to satisfy what we have all come to know as standard due diligence checklist items in a real estate transaction is simply the prudent thing to do.