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Survey v. Title Insurance

By sedoo

We often get asked by Buyers and Real Estate Agents whether it is preferable to have a Survey or Title Insurance for a residential real estate transaction. The answer is that it preferable to have both. It is essential to have Title Insurance for residential real estate transactions but there is a misconception that it is never necessary to have a Survey.

 

A Survey is an Ontario Land Surveyor opinion on the extent of title with measurements and boundaries of the subject land, prepared using measurements taken on the ground and compared with the title of the subject land and the surrounding lands on file at the Land Registry Office.

 

A Survey discloses the location of structures and will usually show visible improvements such as fences, hedges, pools, overhead wires, easements and rights-of-way in favour of neighbouring owners and utility companies.

 

If the document is not legible, signed, sealed and dated by an Ontario Land Surveyor, it is not a survey. The Survey should also be current (“up-to-date”) to the time of the transaction.

 

Survey Benefits include:

(i) complete, precise, and up-to-date information;

(ii) ensure buying the correct property, and verify the shape and dimensions of the land;

(iii) assists in verifying the current state of title;

(iv) shows where the improvements are located in relation to the property boundaries, as well as encroachments, and other features of the property;

(v) discloses problems such as encroachments, prescriptive uses, easements, etc., that may have occurred prior to conversion to the Land Titles system; and

(vi) municipal zoning by-law compliance and setback verification.

 

Potential pitfalls without a Survey include:

(i) building on the wrong lot;

(ii) missing right of way;

(iii) missing driveway;

(iv) building on neighbour’s lot;

(v) building cottage on road allowance;

(vi) septic bed on the neighbour’s property;

(vii) swimming pool on neighbour’s property;

(viii) boundary and fence disputes and adverse possession;

(ix) shoreline issues; and

(x) retaining wall v. lot boundary.

 

A Title Insurance policy (i)  protects a Buyer from not having a survey; (ii) ensures the state of the property  as of the closing date; (iii) ensures that the Buyer legally obtains what the Buyer sees physically on the land at the time of the purchase, or will be compensated for its loss. Anything that would have been revealed by a Survey done on the day of closing is covered by a Title Insurance policy.

 

However, a Title Insurance policy does not (i) show you how far the house is from the lot lines; (ii) show you where to install fences; (iii) cover the ability to install a swimming pool, garage or hot tub in the future; or (iv) fully protect the owner from damages resulting from misplaced border fences, party walls, or retaining walls.

 

So is the need for a Survey replaced by Title Insurance? Title Insurance and Surveys are both important parts of a residential real estate transaction serving different functions, but one is not a replacement for the other. It is recommended that Buyers and Real Estate Agents consult with us to consider whether for a particular transaction obtaining both Title Insurance and a Survey are advisable before proceeding with the purchase transaction.

 

 

 

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David H. Korman is a Partner at Kormans LLP. His practice areas include residential and commercial real estate transactions, commercial leasing and private and institutional lending. You can reach David at dkorman@kormans.ca.

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