Among the many documents required during a residential or commercial purchase, the property survey is one of the most important. Drawn after his or her physical examination of the property, it displays the surveyor’s certified opinion on the location of record boundaries, buildings and other structures, and any encroachments, projections, or variations that conflict with the record boundary lines. It is the legal representation of exactly what is being purchased and insured, and it affects you as the insured property owner in several ways.
First, as you may already know, property taxes are typically based on lot size and existing structures. If the boundary line measurements shown on the survey are different from those on the municipality’s tax map, then the property taxes are likely artificially high (or low) and should be adjusted accordingly. Also, it is highly unlikely that this issue will be resolved prior to closing, and the title insurance company is not permitted to determine which metes and bounds measurements are right. Therefore, the insured legal description of the property in the owner’s and the lender’s policies will include both sets of measurements, confusing the location of your property’s actual boundaries.
Another concern, arguably even more important than incorrect property taxes and (typically minor) variations between tax maps and survey lines, is the possibility that you may be paying for land that is clearly inside the property’s boundary lines, but which will NOT belong to you post-closing. This happens when the survey reveals an area inside the property’s boundary that is “out of possession.” What does this mean? It means the survey shows a structure which is completely blocking access to at least one foot of the property. These structures are usually fences or walls, and their misplacement is usually inadvertent. But whether the neighbor’s fence juts out onto the surveyed property, or the property’s own fence is just too small, the result is the same: everything between the fence and the property line is legally out of the property owner’s possession and cannot be insured by a title insurance policy.
Of course, in reality most of the fences and walls located on residential property are low enough to be scaled, and the property owner can certainly remove his or her own fences. Unfortunately, it is not necessary for the area deemed “out of possession” to be physically inaccessible; the mere presence of a permanent-looking structure which is dissecting the property puts ownership of the dissected area in question and therefore prevents the title insurance company from insuring your ownership to it.
Thankfully, “out of possession” problems are not common, and can in some cases be resolved prior to closing. For example, areas initially suspected of being out of possession may be found as accessible upon close examination by an experienced survey reader. Also, in cases of actual out of possession issues, your attorney and title insurance company can work together in order to obtain and record a Boundary Line Agreement or other sworn document from the adjoining property owner. In any event, dealing with an “out of possession” issue is tricky, and having an experienced title company on board to deal with it can make a world of difference.
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