I received a phone call from a buyer of a property that wanted a survey, his realtor told him that a survey was unnecessary and not required.
His response to the realtor was, no I need a survey and I want to know where the property lines are and if there are any encroachments. - So he calls me.
He sends me the Title Insurance Commitments which I requested and within the Commitment is a Survey Affidavit, that references a survey done some 17 years ago. Apparently the old survey is sufficient for the Title Co. to issue Title Insurance, providing that the seller signs the Affidavit.
BTW - there have been 3 owners of this property since 1997 (based upon county records)
The issue and Survey Affidavits was prevalent 10-15 yrs ago
It's been a while since I've seen one of these, I guess Title Co. are still using them.
-- here is a copy of the Affidavit
Yep - these are still in use. Recently lost a $17K ALTA because the absentee owner signed one for a $17M refinancing. He has not seen the property in 12 years but was willing to accept the liability.
Remember, the Title Cos. are in the business of risk taking. Surveyors are not.
The whole thing is a scam. What usually happens is:
1. Lender requires Title Insurance that covers matters of survey.
2. The Real Estate Agent tells Buyer that no survey is required to obtain the Title Insurance. Agent knows that a survey can't do anything positive for the Agent so why take the risk a survey will turn up something that will kill the deal?
3. Buyer gets to closing and sees the line item on the closing statement "$XXX for Title Insurance".
4. Some years later Buyer finds out there is a problem.
5. Buyer contacts Title Insurance Company. Is told they have no policy. Zero coverage for anything (survey related or not). The item on the closing statement was to cover the lender. Buyer paid for it, got nothing and was never told that the policy was for the lender.
5. Everyone is happy except the Buyer who feels like they have been the victim of a scam. Guess what. They have been.
Larry P
> Remember, the Title Cos. are in the business of risk taking. Surveyors are not.
Title and all insurance co's are in the business of shifting all risks to others, such as surveyors and really, anyone else beside them. If you are in business, you better be on top of risk avoidance, surveyor or otherwise.
> The whole thing is a scam. What usually happens is:
>
> 1. Lender requires Title Insurance that covers matters of survey.
>
> 2. The Real Estate Agent tells Buyer that no survey is required to obtain the Title Insurance. Agent knows that a survey can't do anything positive for the Agent so why take the risk a survey will turn up something that will kill the deal?
>
> 3. Buyer gets to closing and sees the line item on the closing statement "$XXX for Title Insurance".
>
> 4. Some years later Buyer finds out there is a problem.
>
> 5. Buyer contacts Title Insurance Company. Is told they have no policy. Zero coverage for anything (survey related or not). The item on the closing statement was to cover the lender. Buyer paid for it, got nothing and was never told that the policy was for the lender.
>
> 5. Everyone is happy except the Buyer who feels like they have been the victim of a scam. Guess what. They have been.
>
> Larry P
Not really a scam. Most buyers have no clue.
Some lenders are nearly as clueless, and don't require current data (title search and survey).
Very few are aware that 99% of the "title polices" are only to protect the Lender.
Most Title Companies will be glad to sell an Owner's Policy for additional cost, but some try to price gouge for nearly the same cost as the Lender's Policy, so Most buyers (being clueless) say no, when in reality you can still get an Owner's Policy for about 20%... If You Ask!
PS: it is shameful that few surveyors and sales people are aware of this
Peter
You are absotively 100% correct. The Commitment Policy only covers the lender's butt, nobody elses. Read the policy; they "except" every little thing that could be a problem.
A survey that indicates any irregularities such as an encroachment or boundary issues only gives them a specific item to "except" out of their coverage.
"A very great man once said 'some people rob you with a fountain pen..' "
"Talkin' New York" - Bob Dylan - 1961
>
> PS: it is shameful that few surveyors and sales people are aware of this
Very True
.
In the case above, what gets my goat is that the buyer is being advised that a survey is not "required".
"Not really a scam. Most buyers have no clue."
That's why it IS a scam!
> "Not really a scam. Most buyers have no clue."
>
> That's why it IS a scam!
When the people whose job it is to know, act in their interest without making certain the client does know and understand, that is the definition of a scam.
Larry P
> "Not really a scam. Most buyers have no clue."
>
> That's why it IS a scam!
Oh, like Obamacare?
> > Remember, the Title Cos. are in the business of risk taking. Surveyors are not.
>
> Title and all insurance co's are in the business of shifting all risks to others, such as surveyors and really, anyone else beside them. If you are in business, you better be on top of risk avoidance, surveyor or otherwise.
Not quite right, Title Ins. Companies do pay off every now and then, although their payout rate is very low compared to the rest of the insurance industry. When they do they're at the top of the heap and can payout millions and bail out the small fish.
I'm a bit puzzled. Title Insurance Companies were my good friends, provided free copies of documents, listened when I pointed out a Schedule B item Does Not Affect and were attentive to my needs and opinions. It's hard for me to remember a buyer not getting Title Insurance and be protected (except for those pesky Schedule B items). I especially loved the Exception "Also excepting those encumbrances which would be shown by a proper land survey".
🙂
Peter
Dylan knows :good:
This is why surveyors should get behind the Torrens Title System. The property gets surveyed and recorded, title is indefeasible (guaranteed by the government). End of story (pretty much).
As near as I can tell, the Insurance policy you purchase is to cover the cost of the Title people if THEY make a blunder filing your deed, there is no coverage for the things most people would consider issues.
It's kinda like your health insurance only covers if the doctor leaves a towel in you when he preforms surgery, I have seen title insurance pay off, but it's rare.
Iowa gets along pretty well without Title Insurance.
> 4. Some years later Buyer finds out there is a problem.
>
> 5. Buyer contacts Title Insurance Company. Is told they have no policy. Zero coverage for anything (survey related or not). The item on the closing statement was to cover the lender. Buyer paid for it, got nothing and was never told that the policy was for the lender.
Since North Carolina is apparently a title theory state, unless the "some years" in #4 is 20-30 years and the note is paid off, selling the home purchaser title insurance when all they have is a possessory interest and don't hold title would seem to be a bigger scam.
Lien Theory States: A majority of states follow a lien theory approach. These states deem mortgages to merely create a lien on land. The legal consequences are such that the mortgagor remains the owner of the land. The mortgagee, in contrast, gains a security interest in the land. Because the mortgagor remains the owner of the land, he is entitled to possession up until the point of a foreclosure sale, at which point the mortgagee may take over possession of the land.
Title Theory States: Those states that follow a title theory approach to mortgages, treat the mortgage as a conveyance of legal title to the mortgagee. The title only passes to the mortgagor once the mortgagor has paid off the mortgage debt. Because the mortgagee has title to the land prior to payment of the debt, the mortgagee is entitled to take possession of the property at any time, even prior to foreclosure, but will generally not take possession until the mortgagor has defaulted on the loan.
The Atty. for a Title Co. recently complained about my quote for a Title Survey for refinancing. "You know we can do this with an owner's affidavit".
I said, "yes I know, but will the property owner tell you about the pool that I know they just built somewhere very close to the property line". The property owner has no incentive whatsoever to tell the truth, even if they do know the truth.
This is why my Title Surveys certification now says "not valid without embossed seal and original signature". At least the property owner might get some hint that there is some value in a new survey.
:good: