Why You Always Want a Survey When Buying Commercial Property

Jan 12, 2017

By Craig T. Watrous:craig.jpg

Surveys are an integral part of any commercial real estate transaction, though sometimes their value comes into question. This post will describe why ordering and careful review of a survey is critical for virtually all commercial real estate transactions.

Not all surveys are equal.  A few common surveys in real estate transactions include: as-built surveys, boundary or land surveys, and ALTA surveys. The type of survey needed depends in large part on the type of commercial transaction, and the type is often a specific requirement for lender financing and title work. 

Types of Surveys:

  • An as-built survey is used generally to show the relationship of a new building to the plans and land; however, these surveys often do not include information on title or boundary issues. 
  • Boundary or land surveys are designed to locate and identify boundary lines between privately held parcels of land but often do not include the improvements (structures) that have been built on the land.
  • An ALTA (American Land Title Association) survey is generally the most comprehensive of the three surveys listed. It is prepared according to specific standards adopted by ALTA and the American Congress on Surveying and Mapping (ACSM). Most importantly, an ALTA survey shows property boundaries, improvement information (height, size, set-backs, etc.) and recorded title items such as easements and access. In most commercial property transactions involving buildings, an ALTA survey is going to be the best bet. 

Why a Survey is Critical:

Some people question the need for a survey if good title insurance is being purchased. While adequate title insurance is a separate critical component of commercial property transactions and the topic of other blog posts, a survey reveals matters not covered by title insurance. For example, ALTA extended title insurance coverage does not disclose the location of utilities, improvements, the relationship of record lines to occupied liens, the relationship between adjoining landowners, or other non-recorded matters that affect the land. A good ALTA survey should show all of these items. Without a survey, a buyer will not have an accurate picture of what the legal description of land you are acquiring looks like on the ground. Photos, though valuable, do not contain the same information that a survey does.

A survey confirms basic and material information about a property, its location and existence. It depicts discrepancies between the actual use of the land and the recorded legal description. It shows the relationship of the property to adjoining properties, as well as the location of physical improvements (not just buildings but also landscaping, parking, utilities, etc.) on the property in relation to the boundaries. The survey may also give the buyer information on whether the property is in violation of zoning ordinances. It can confirm the property’s size, setbacks, and the improvements’ heights and sizes.  It will show recorded easements, access, parking, encroachments, and the location of utilities. It will also illustrate if the property is located within a flood plain or other flood hazard area. When paying the price for a piece of commercial property, all of this information is highly relevant. Only with a survey can all of this information be concisely recorded, displayed, and carefully considered in the course of the buyer’s due diligence.

If you need legal assistance with your commercial property transaction, give us a call. For more information on our commercial property practice, visit our commercial real estate page. 

Related Posts:

9 Items to Request in the Purchase of an Office Building

Things to Consider When You’re Buying a Business


Mallon Lonnquist Morris & Watrous, PLLC, is a business, employment, real estate, and litigation law firm. Craig T. Watrous is a Colorado real estate attorney and partner at MLMW, based in Denver, Colorado. Craig regularly represents clients on both sides of commercial property transactions both in contracting and disputes. Craig can be reached at cwatrous@mlmw-law.com and (303) 722-2165.







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