Title Insurance and Property Surveys: Are They Connected?

title insurance and property surveys

Did you know that the three top issues related to property transactions are problems with boundaries, easements, and errors and omissions in the chain of title? It highlights the importance of two aspects of a property purchase, namely title insurance and property surveys. Join us as we define these elements and how they relate to a successful property transaction.

What is a Property Survey?

A property survey is a detailed property map outlining boundaries, structures, and encroachments or easements. These surveys come in various forms, such as boundary, topographic, and site-planning surveys, each serving a unique purpose. Obtaining a property survey involves hiring a professional surveyor who assesses the property and provides an official report. This document is crucial for accurate property descriptions and avoiding disputes with neighbors or local authorities.

What is Title Insurance?

Title insurance safeguards against financial loss from defects in the title to real estate property. Unlike traditional insurance, which protects against future events, title insurance covers past occurrences that may affect the property’s title. There are two main types: Owner’s Title Insurance, which protects the property owner, and Lender’s Title Insurance, which lenders require to protect their investment. This insurance is vital to protect owners from legal disputes over property ownership.

The Intersection of Property Surveys and Title Insurance

The relationship between property surveys and title insurance is intricate. Often, in property transactions, the buyer initiates a survey. The reasons for this could be the buyer’s desire to perform due diligence or perhaps a bank requests a survey for the buyer to qualify for a commercial loan.

Regardless of the reason, a property survey can reveal issues that might affect the title, such as boundary disputes or encroachments. These issues can lead to claims against the property, which may be covered by the title insurance policy (if a policy is in place). Title insurance can help resolve title issues and, if needed, provide the owner with financial protection and legal defense.

Should You Always Get a Property Survey?

The decision to obtain a property survey hinges on various factors, including the type of property, its location, and any known issues. While not always mandatory, a property survey can prevent future legal troubles and financial losses. It provides clarity and certainty, which are invaluable in real estate transactions. Experts often recommend a property survey, especially for properties with unclear boundaries or those in densely populated areas.

What are Some Examples of Issues that Arise From Property Boundaries?

Example #1 – Property Survey Required for Title Insurance

A couple was in the process of buying a beautiful countryside home. A historical easement was discovered during the title insurance application, indicating a right-of-way for a neighboring farm across the property they intended to purchase.

The title insurance company requested a current property survey to understand the extent of the easement. The couple hired a professional surveyor who conducted a detailed assessment.

The survey revealed that the easement was significantly broader than previously thought, encroaching upon the area where the couple had planned to create a garden. This new information allowed them to renegotiate the property price, reflecting the limitations imposed by the easement. Thanks to the property survey, they could make an informed decision about the purchase and adjust their plans accordingly.

Example #2. Dispute Over Property Lines Without Title Insurance

Two neighbors, Mr. Smith and Mrs. Johnson, owned adjacent properties in a suburban neighborhood. Neither property had an updated evaluation, and neither homeowner had opted for title insurance.

When Mr. Smith decided to build a fence, he based it on his assumption of the property boundary. However, Mrs. Johnson disputed his placement, claiming it encroached on her land.

With no recent property survey or title insurance to refer to, the dispute escalated. The neighbors had to hire surveyors to determine the accurate boundaries, resulting in legal fees and strained relations. The survey ultimately showed that Mr. Smith had built the fence on Mrs. Johnson’s property. Without title insurance to assist in resolving the dispute or covering the legal costs, both neighbors incurred significant expenses and stress.

These examples illustrate the role property surveys have in validating the details of a property transaction and the role of title insurance in reducing risks and resolving disputes related to property ownership and boundaries.

How Cortes & Hay Can Help

At Cortes & Hay, we provide comprehensive title insurance services and facilitate property surveys. Our expertise ensures that your property transactions are secure and transparent. We assist our clients in understanding the complexities of title insurance and (when appropriate) the necessity of property surveys.

Understanding the nuances of title insurance and property surveys is crucial in real estate transactions. Being well-informed provides peace of mind and shields you from unforeseen legal and financial complications. If you are navigating the complex waters of property ownership, let Cortes & Hay guide you with our expertise. Contact us today if you are in the greater New Jersey area and are looking for a trusted partner for your next real estate transaction.