I guess this may have been beaten to death but here goes... I know you should never put successors and/or assigns after an owner's name in the certification (based on Gary Kent's excellent articles on ALTA certifications). I have been asked to place successors and/or assigns after the lender name with the reason being stated "it is standard industry practice" (my response to that was "just because it was done in years past doesn't mean it is correct now"). Mr. Kent suggests careful consideration about doing this although he doesn't come right out and say "Don't do it". My concern is that with all the foreclosures happening if you put the lender's name, its successors and/or assigns in the certification and then the mortgage is foreclosed on and the lender becomes the owner, you now have a certification that can be used for purposes that was never intended. In other words, the successors and/or assigns after the lender name was a standard in years past to facilitate the lender's ability to sell or assign the mortgage thus the successors and/or assigns pertained or was intended to pertain strictly to lenders. Now if the lender becomes the owner of the property through the foreclosure process you now have an owner out there with successors and/or assigns attached to his name. I haven't seen anything in the 2005 standards or the new 2011 standards that says you can alter the certification to include successors and/or assigns, in fact, the new standards list the certification with specific instructions that it is to be unaltered. So, if you place successors and/or assigns have you altered the certification? If you have altered the certification can you now call your survey and ALTA survey or would you be at risk for misrepresenting the survey as an ALTA survey since it no longer contains the required certification? Anyone have examples of horror stories related to unintended uses of an ALTA survey? Since lenders have been using "owner affidavits" for years to bypass having to obtain an up to date survey, why can't lenders provide an affidavit to whoever they are selling or assigning the mortgage to? Oh, by the way, this is not about generating business so please don't even go there (my apologies if it comes across that way). I am concerned about the liability risks and the potential for being exposed to legal fees defending yourself from some successor or assigns' attorney(s) if something goes wrong. Innocent or not you can potentially incur huge legal fees defending yourself. Thanks in advance for your imput. (Yes I am strongly considering never doing another ALTA.)
Phil
I do it sometimes, unless I can get away with not doing it.
Had one here recently where I held out until the last week. The I get the call from the attorney and we talked about it.
He said the main reason it is asked for is because some of these financing groups are put together just to make the deal and then things happen during closing where the loans might be transfered to other entities within minutes and sometimes names of partnerships change at the last minute as deals are being put together. So, it is a matter of convenience for them to have it done that way.
Most lenders will not loan money on outdated surveys anyway, so after 90 days or whatever, they would want an "updated" certification/survey regardless if successors or assigns were mentioned in the certificate.
I attended Mr. Kent's seminar at the Illinois conference last week. He went over the successors and assigns issue and basically said that the parties to whom the survey is certified to should be stated within the contract. However, if the lender wants additional parties named, there should be an additional charge. He also did say that if successors and assigns were to be added, it should only be to the lender portion of the cert., not the owner.
In my opinion, this is not an "industry standard." That is a typical line of bs that lenders give so that we as surveyors will give in. Also, I don't think that adding this would be altering the certification. Try stating "Big Bank of the U.S., as lender only" and see if that flies. If not, tell them that you will do what you have contracted to do and only that.
As of Wednesday I will inform everyone who asks me to alter the certification that I cannot do so unless it is to meet one of the criteria specified in Section 3B of the Minimum Standards. I certainly do not think it is fair to be asked to be liable to unknown, unnamed future parties...
The new certification allows for "names of others as negotiated with the client." In my opinion, successors and assigns would fall under this language.
> My concern is that with all the foreclosures happening if you put the lender's name, its successors and/or assigns in the certification and then the mortgage is foreclosed on and the lender becomes the owner, you now have a certification that can be used for purposes that was never intended.
You lost me on that statement. Surveys are intended to show property lines and improvements of a certain date, right? What difference does it make who the survey is certified to? If you are providing an ALTA survey, you are expected to meet certain standards. The identity of any future parties involved in the property has no bearing on the standard used to conduct the survey.
Industry standard is defined by the published standards. The actions of some, or even many practitioners do not necessarily set industry standard, especially if those actions are in conflict with published standards and/or are of questionable wisdom.
In the vast majority of occasions, there will be no problem and it will never become an issue, but if something pops up, your drawing is used in a subsequent transaction without giving you an opportunity for an update, with "successors and assigns" you have provided an open door for the lenders and purchasers of that transaction without them having to go through the step of showing that you had a specific duty toward them.
Thank you for the replies. Dan, I had a request for an ALTA "update" of a 10 year old survey and the client did not like the price. I explained that the surveyor who did the original ALTA no longer worked for the company and I am prevented by state regulations from certifying to work that was not performed by me or under my direct supervision. I got a call several days later from a title company requesting copies of the original ALTA survey. The title rep said the owner was going to sign an owner's affidavit that nothing had changed for the re-financing. I informed her that one month after that ALTA was performed the property had been subdivided, a sewer easement passing through a building had been vacated and relocated and there may be additional water line easements (I had prepared easement plats on this property two years earlier although I don't know if the easements were ever conveyed). Her response - "Oh. I guess the owner's affidavit wouldn't be accurate". So, apparently there are lenders out there still willing to refinance "older surveys (at least in VA). The explanation the attorney gave makes sense but I don't believe I have an obligation to compromise for their convenience.
To Azcailtx - I considered placing the following to "lender (insert name), their successors and/or assigns for lending purposes only" but I'm not real comfortable even with that. As far as the certification allowing placement of successors and/or assigns it seems to me the certification language implies specific names are to be listed. I interpret successors and/or assigns as being vague or very unspecific.
Evan, your point was well stated. Thank you.
Again, thanks to all for your responses.
Phil
The “Successors & Assigns” clause is due to the fact that mortgage backed securities are still around (even though they were a major contributor to the Great Recession), inevitably the mortgage will be sold or “packaged”, so in this instance, the “Successors & Assigns” are those buyers & sellers in the financial pipeline. As far as increasing your liability by having this clause in the certification… depending on the Statute of Limitations in the State(s) you practice in, your liability is in no way increased or diminished by the “Successors & Assigns” clause because you are already liable to any “Successor” or adjoining party that may be damaged by your Land Survey for the statutory time period.
I was at Mr. Kent's excellent seminar on the new standards. Gary related that he had a conversation with an attorney who told him that his job as an attorney was to jump up and down, scream, threaten or otherwise cajole the surveyor into signing those open-ended certifications. The attorney added that the surveyor was a damn fool if he did.
Read your 2011 ALTA standards. No more Successors and Assigns unless you negotiate it. Add a fee. Start at $500. See how bad they really want it. I jump for cash. I'm not scared of Successors and Assigns if I do my work right. But now I will not be bullied into giving it away. You get 3 entities included in my ALTA fee (owner, bank, title co.) per the standards. I'll be glad to tack on as many extras as you want at $500 a pop.
Of course you guys doing ALTAs for $600 will have adjust that figure to suit your low balls.
Would your insurance carrier approve adding the successors/assigns to the certification? I'd be sending the new cert to them for their approval first. If they say no then explain to the attorney jumping up and down.
It has worked for me several times in the past.
I find this issue to be a tempest in a teapot. If the survey is correct, why should it matter? I prepare a boundary survey with the idea that the whole world may depend on its content being accurate (and I charge accordingly).
> The “Successors & Assigns” clause is due to the fact that mortgage backed securities are still around (even though they were a major contributor to the Great Recession), inevitably the mortgage will be sold or “packaged”, so in this instance, the “Successors & Assigns” are those buyers & sellers in the financial pipeline. As far as increasing your liability by having this clause in the certification… depending on the Statute of Limitations in the State(s) you practice in, your liability is in no way increased or diminished by the “Successors & Assigns” clause because you are already liable to any “Successor” or adjoining party that may be damaged by your Land Survey for the statutory time period.
Thank you, Mike!
I would also add that your exposure is not increased as well. At any given moment of time there is only one lender who is relying on your survey who could claim damages if your survey is found to be incorrect. When they pass that loan to a successor, there's still one lender involved. An outside lender wanting to issue a second loan on the property would not be considered a "successor or assign" of the first lender, so there would be no additional exposure.
JBS
We ran the certification by our insurer who said they didn't necessarily have a problem with successors and/or assigns for the lender since "it" is pretty standard language.
Phil
> Of course you guys doing ALTAs for $600 will have adjust that figure to suit your low balls.
You're not referring to Buster, are you Snoop?
Seems to be just the ticket for some of the low-ballers out there.
;o)
JBS
I prepare my surveys basically under the same premise that anybody and everybody in the whole world will have access to it. What matters to me is am I placing myself at risk for significant legal fees defending myself from someone who was not an original party of the certification? For example, let's say someone (I'll call him/her Party X) uses the survey 5 years from now. During that 5 year period an adjoining owner builds a wall or fence that encroaches into the subject property. Party X realizes the wall or fence encroaches the subject property when it interferes with some use Party X has for that portion of his land but it isn't shown on my plat. Party X wants me to locate the encroachment but doesn't want to pay the fee to have the encroachment located and added to the plat (his reasoning doesn't matter - either he thinks the fee is too much or he thinks I'm somehow obligated to do this at no cost to him). Party X decides to sue because my plat didn't show the fence or wall. I successfully defend my survey but at a cost of a couple thousand dollars in legal fees (which comes out of my pocket). Do you see where I'm coming from now? Am I just not seeing things right?
Phil
I've watched this thread with interest.
My thought is that in the first place the certification has nothing to do with the quality of the individual surveyor, or their opinion on boundarys, or the thoroughness of their office, research, or fieldwork. I don't know why some people always have to bring that thought into the certification discussion. It seems like a denial of any responsibility to know something about business. Some kind of assertion that a surveyor need only be knowledgable in technical surveying matters and they will be considered a protector and benefactor of the public good and untouchable in their rightousness. Nothing could be farther from the truth.
Second, the language in question is used for lending institutions because of the way the market works and because of that we all know they are sophisticated parties and consider all ramifications in relying on a survey that had a certain purpose and date. They are generally automatically covered by title insurance which includes survey matters if a survey was initially provided.
Third, none of number two is necessarily true of owners. We have no idea who the next owner may be, when the property may change hands, how sophisticated they are. However, by certifying to these subsequent owners you may well be giving them an unwarranted sense of being protected from any survey issues that may arise, even if the survey was 20 years ago.
Fourth, the fact that lenders sometimes do what we may consider dumb things does not mean they are not sophisticated parties. The fact that a new owner does the same is clear evidence they are not sophisticated parties.
Fifth, it could be argued that contracting with all subsequent owners restarts the clock on contractual liability each time the property transfers. With lenders you are only contracting for the intial loan and not future loans, mortgages, refinances.
It is reasonable to certify to the current buyer.
The identities you list in your cert are the ones you admit that you have a duty, that means that they do not have to prove they should rely on your work.
It costs just as much to prove you are innocent as it does to lose and be guilty, that is why you limit those who have a straight shot at you.
It is a key part of our legal system to make others prove you had a duty to them because the 'burden of proof' is more costly to those who want to sue you.
Richard Schaut
> Party X decides to sue because my plat didn't show the fence or wall. I successfully defend my survey but at a cost of a couple thousand dollars in legal fees (which comes out of my pocket). Do you see where I'm coming from now? Am I just not seeing things right?
>
Then party X is a bigger fool than the example. Who, in their right mind, would ever believe that a survey would show matters which arose after the date of the survey? The survey does have a date, doesn't it?
Even if party X was just such a fool, it would be impossible to protect yourself from a lawsuit. You can't go through life worrying about fools. There are laws that protect you from frivolous lawsuits.
JBS