If a title company will issue survey-related protection based on an Improvement Location Certificate (ILC), why might it be worthwhile for my client to obtain a more rigorous (and more expensive) survey?
Last month’s article showed an example where an owner had a title problem which might have been detected prior to closing had the buyer obtained an ILC. The survey protection in buyer’s title policy did not protect the buyer from title problem. With the benefit of hindsight, the buyer in last month’s column regretted not spending the money to obtain a pre-closing ILC.
Yet an ILC merely estimates the described perimeter of property in relation to the property’s improvements. Colorado statues require ILCs to disclaim: “I further certify that this improvement location certificate is not a land survey plat or improvement survey plat, and that it is not to be relied upon for the establishment of fence, building or other future improvements lines.” Depending upon the buyer’s special needs, and the topography, the age of the improvements and the history of the property, it may be worthwhile for a buyer to obtain a survey even in situations where the title company will issue survey protection based merely upon an ILC.
Consider your buyer who purchased the house, detached garage and lot depicted in II-A.
The location of the detached garage (with or without a fence) suggests a northern and western boundary. This parcel is in an older part of town, and the title company requires an ILC. The ILC confirms the boundary suggested by the detached garage and diagram II-A. The buyer closes and obtains a title policy with survey protection.
After closing, the neighbor to the west refinances her property and obtains an ILC. That ILC shows the described shared boundary as depicted in II-B.
To resolve the discrepancy between the two ILCs, the neighbors agree to jointly share in the cost of a more rigorous survey, which confirms the neighbor’s ILC and diagram II-B. If the neighbor to the west forces a removal of the detached garage so that it no longer encroaches onto the neighbor’s property, the title company is liable for your buyer’s damages.
Yet, in addition to forcing a removal of the detached garage, the neighbor builds a six foot privacy fence along the true common boundary line, flush with the wood deck This reduces the amount of evening sun on the deck and destroys the feel of the western side yard for your buyer. She purchased the house because of the pleasure she would receive from enjoying her cocktail on the side yard deck. She would not have purchased the house if she had known that the deck was flush with her neighbor’s property line. She feels that the house is much less valuable than what she paid for it. The title company takes the position that it has no liability for the deck problems because there is no encroachment.
In real life, these situations are often more complicated than depicted in the examples, and sometimes have solutions which accommodate the buyer’s expectations. For example, in the last month’s example, the fence may have existed long enough to establish adverse possession or a prescriptive easement. The fence may have been up long enough to move the described boundary to coincide with the boundary established by the fence.
Neighbors may get along with one another, and the city or county may be accommodating, so that the parties may be able to work out a lot line adjustment moving the boundaries to the boundaries expected by the buyer. Without moving the boundaries, the owner of the house in the first example may be able to obtain a zoning variance to build the addition notwithstanding the narrower side yard.
Yet even in the best of circumstances, these solutions cause owners to incur unexpected inconvenience and expense. This author suggests that regardless of whether an ILC is required by the title company or the lender, and regardless of whether the title company is willing to issue survey protection without an ILC, the benefits of an ILC for a buyer are worth the cost. If buyers identify specific needs (such as the need to build an addition–see last month’s example) or the importance of a deck, then buyers should consider incurring the expense, or asking sellers to bear the expense, of a survey.
A version of this article appeared in the Colorado REALTOR® News, the monthly publication of the Colorado Association of REALTORS®.