Survey Review Checklist for CRE Deals
In commercial real estate (CRE) transactions, survey reviews are critical for identifying risks and ensuring property details align with legal, zoning, and title requirements. Overlooking this step can lead to costly disputes, legal issues, or deal disruptions. Here's what you need to know:
Key Takeaways:
- Purpose: Surveys uncover encroachments, easements, and access issues, ensuring the property meets zoning laws and lender requirements.
- Preparation: Gather documents like title commitments, prior surveys, legal descriptions, and zoning certifications.
- Checklist Highlights:
- Verify property boundaries and legal descriptions.
- Cross-check easements, rights of way, and utility access.
- Identify encroachments, setback compliance, and flood zone data.
- Review environmental factors and confirm utility availability.
Addressing survey issues early - such as boundary discrepancies or unrecorded easements - saves time and money. Tools like The Fractional Analyst streamline the process by integrating survey data with financial models, helping you make informed decisions.
Bottom Line: A detailed survey review minimizes risks, supports due diligence, and ensures smoother CRE transactions.
Pre-Review Preparation: Collecting Required Documents and Information
Getting everything in order before a survey review can save time, money, and headaches. Missing or incomplete documentation not only slows things down but can also lead to unexpected risks and extra costs.
Starting the due diligence process early gives you enough time to thoroughly review documents and address any issues that might arise.
Documents You Need to Gather
Having the right paperwork ensures the survey is accurate and helps uncover any potential conflicts.
- Title commitment and preliminary title report: These are essential. They outline easements, restrictions, and exceptions that need to be verified against the survey. Often, the title commitment will point to specific items requiring confirmation, so cross-referencing these with the survey is critical.
- Prior surveys and as-built drawings: These documents provide historical context. They show whether past improvements were made according to approved plans and if any changes have occurred since the last survey.
- Legal descriptions from the purchase agreement: The legal description in the purchase agreement must match the one in the survey. Any discrepancies here could lead to significant issues.
- Site plans, architectural drawings, and engineering reports: These help confirm that improvements, like buildings and parking areas, align with approved designs. This is especially important for properties with recent construction or renovations, ensuring everything complies with setback and location requirements.
- Zoning certifications and municipal records: These documents outline the zoning rules that the survey must reflect, such as setback requirements, height restrictions, and other zoning factors.
- Environmental reports and flood zone determinations: These can influence survey requirements and highlight areas that need extra attention. For instance, FEMA flood maps and wetland delineations can affect property boundaries and development possibilities.
Once you’ve gathered these documents, understanding the relevant survey standards is the next step.
ALTA/NSPS Standards Overview
After collecting the necessary paperwork, it’s important to review everything in the context of industry standards. The American Land Title Association (ALTA) and the National Society of Professional Surveyors (NSPS) have developed detailed guidelines for commercial property surveys.
The ALTA/NSPS 2016 standards require surveys to precisely depict boundaries, improvements, and easements. Table A items allow for additional details, like topography and utility locations, tailored to the specific transaction. The surveyor’s certification also clarifies who can rely on the survey, ensuring accountability.
The required level of accuracy depends on the property type and the survey’s purpose. For most commercial properties, high precision is non-negotiable - it’s essential for spotting potential boundary disputes or encroachments before closing.
Surveyors also dig into public records, such as deeds and plats, to ensure the survey reflects all rights and restrictions tied to the property. This step is crucial for identifying any conflicts that could complicate the transaction.
Survey Review Checklist Items
When reviewing a property survey, it’s essential to focus on the legal descriptions, boundaries, and other key details to avoid any issues that could disrupt your transaction. Here’s a breakdown of what to look for:
Legal Description and Property Boundaries
The legal description of a property is the cornerstone of your ownership rights, so it must be accurate. Compare the survey’s legal description line-by-line with the purchase agreement and title commitment. Even small errors in lot numbers or metes and bounds can lead to legal headaches.
For boundary verification, ensure all property lines are clearly indicated with physical markers like iron rods or concrete monuments. The survey should detail the distances and bearings between these markers, forming a closed traverse that ties everything together.
Pay close attention to acreage calculations. If your contract specifies 5.25 acres but the survey reports 4.87 acres, this discrepancy needs to be addressed before closing. Some agreements allow for small variances - typically 2-3% - but anything larger may require renegotiation.
For larger commercial properties, tract contiguity is critical. The survey should confirm that all parcels are connected into a single, continuous property. Gaps or isolated sections can cause access problems and complicate future development.
Easements and Rights of Way Review
Cross-check the title commitment with the survey to ensure all easements are accounted for. The survey should reflect every easement listed in the title work, and vice versa.
- Utility easements: Verify the location and width of easements for utilities like electricity, gas, water, and telecommunications. These are typically 10 to 30 feet wide. If your property depends on shared access, confirm proper recording and capacity.
- Access easements: The survey should show clear, unobstructed access to public roads. This is especially important for landlocked properties or those with limited frontage. Be aware of any restrictions, such as limits on commercial traffic or usage hours.
- Drainage and stormwater easements: These are increasingly important as regulations tighten. Look for retention ponds, drainage structures, or natural waterways on the survey, as these could affect development plans and come with maintenance obligations.
Finally, check for physical encroachments and ensure they align with the survey’s recorded boundaries.
Encroachments and Setback Requirements
The survey should identify any encroachments, such as structures or fences crossing property lines.
- Building encroachments: If your building extends onto a neighboring property, even slightly, it could lead to legal disputes or force you to remove the structure. Similarly, if a neighbor’s improvements encroach on your property, consider resolving the issue through easement agreements or boundary adjustments.
- Zoning setback compliance: Compare the survey with zoning requirements to ensure all structures meet setback rules. For commercial properties, front setbacks are often 25 to 50 feet, while side and rear setbacks range from 10 to 25 feet.
- Parking and landscaping requirements: Many municipalities have specific rules for parking ratios and landscaped areas. The survey should detail parking spaces, loading zones, and green spaces to confirm compliance.
Access and Utility Confirmation
The survey must demonstrate that access routes and utilities meet your property’s needs.
- Road frontage analysis: Confirm the width and condition of any public road frontage. For commercial use, roads typically need to be 24 to 30 feet wide for two-way traffic. Check for any restrictions, like median barriers or limited turning access.
- Utility availability: Verify that all necessary services - electricity, water, gas, sewer - are available at the property boundaries and have the capacity to meet your needs. The survey should show utility connections and note any required infrastructure upgrades.
- Loading and service access: For retail, industrial, or office properties, ensure there are clear paths for delivery trucks, trash collection, and emergency vehicles. These routes should not interfere with customer parking or traffic flow.
Flood Zones and Environmental Considerations
The survey should clearly outline any flood zone boundaries, as designated by FEMA, and include base flood elevation data. Properties in high-risk zones (A and V) will face higher insurance premiums and stricter building requirements. Elevation data is crucial for determining whether flood-proofing or elevation measures are needed.
Check for wetland indicators on the survey, as development in these areas is heavily regulated. Wetland boundaries, seasonal water features, or protected habitats can limit your options and add permitting or mitigation costs.
Look for environmental hazard markers, such as underground storage tanks or contaminated soil areas. These features can significantly impact property value and may require costly remediation.
Finally, consider topographic details like slopes, drainage patterns, and elevation changes. These factors influence construction costs and compliance with local regulations. The survey should provide enough detail to support site planning and cost estimates for your project.
Common Issues and How to Fix Them
Survey reviews often uncover problems that can throw a wrench into commercial real estate transactions if not addressed. Being aware of these issues and knowing how to tackle them can help you move through the due diligence process smoothly and avoid costly delays.
Typical Survey Problems
One of the most frequent problems is boundary discrepancies. These happen when the property lines shown on the survey don’t align with the legal description in the title documents or when neighbors dispute shared boundaries. Older surveys can be especially tricky, as outdated errors may have snowballed over time, creating confusion about where the property actually begins and ends.
Another common issue is unrecorded easements. For instance, you might find utility lines, access roads, or drainage systems crossing your property that aren’t documented in the title commitment. These can restrict your development plans and saddle you with unexpected maintenance responsibilities. On the flip side, missing easements can leave you without legal access to utilities or public roads you assumed were available.
Building encroachments are another headache, especially on older properties. These may require boundary adjustments or new easement agreements to resolve.
Zoning and setback violations often surface when comparing the survey to current zoning rules. Structures built under older regulations may no longer meet updated requirements for setbacks, parking, or landscaping. This can complicate plans for renovations, expansions, or obtaining permits.
Access and utility deficiencies can also hurt a property’s value and usability. A survey might reveal limited road frontage, inadequate utility capacity, or reliance on poorly maintained private roads. Emergency vehicle access requirements for commercial properties are particularly strict and may require additional infrastructure work.
Lastly, flood zone and environmental issues are becoming more common as regulations tighten. A property might now fall within a designated flood zone, include wetlands that weren’t previously identified, or have hidden environmental concerns. These can affect insurance costs, development plans, and overall property value.
Here’s how you can address these challenges effectively.
Steps to Resolve Survey Issues
Once you’ve identified survey issues, taking the right steps can save time and money.
For boundary discrepancies, the first step is to work out a boundary line agreement with neighboring property owners. This legal document clarifies property lines and can be officially recorded to prevent future disputes. If the discrepancy involves a significant amount of land or a high-value property, hiring a professional surveyor for a detailed boundary survey is a smart move.
If you discover unrecorded easements, consult your attorney to document historical usage as a prescriptive easement. For example, if utility companies or others have been using parts of your property without a formal agreement, negotiating an official easement document can protect your interests while recognizing those existing rights.
Title insurance endorsements can also address some survey issues without requiring physical changes. For example:
- The ALTA 3.1 Zoning Endorsement provides coverage for zoning violations.
- The ALTA 9 Restrictions Endorsement covers violations of recorded restrictions.
When dealing with building encroachments, assess whether the issue is minor enough to handle through title insurance or if it requires physical changes. Small encroachments might be manageable with insurance, but larger ones could call for boundary adjustments, easement agreements, or even removing the encroaching structure.
If the original survey contains errors, ask your surveyor for a corrected or updated version. Keep in mind that revisions can take time and may add to your costs, depending on the complexity of the corrections.
For zoning compliance issues, reach out to your local planning department to explore solutions. Some violations can be addressed with variance applications or conditional use permits, while others may require modifications to bring the property into compliance. The extent of work needed can vary widely.
Environmental and flood zone concerns often require specialized expertise. You may need to delineate wetlands, obtain elevation certificates, or implement flood mitigation measures, all of which can add to project costs.
Throughout this process, keep lenders, attorneys, and closing agents in the loop. Resolving these issues early can prevent delays when it’s time to close.
If survey issues uncover unexpected problems, consider negotiating changes to your contract. This might include adjustments to the purchase price, extensions to due diligence periods, or requiring the seller to address specific issues before closing.
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Using The Fractional Analyst for Survey and Due Diligence Support
In commercial real estate, blending survey findings with financial analysis is a critical step in making informed investment decisions. Surveys uncover essential data that, when integrated into financial models and transaction workflows, can significantly influence the outcome of a deal. The Fractional Analyst is designed to provide the tools and expertise needed to transform survey results into actionable insights that support smarter investment strategies.
One standout feature is CoreCast's geospatial analysis tools, which offer a deep dive into site characteristics like access, parking, landscaping, and environmental factors. These tools simplify the process by merging survey data with zoning maps and regulatory documents, making it easier to assess project feasibility and predict financial outcomes. This geospatial analysis lays the groundwork for more in-depth regulatory evaluations.
If surveys uncover zoning or setback violations, The Fractional Analyst’s zoning tools step in to quantify both the regulatory and financial implications. For instance, if a survey identifies a building encroachment that breaches setback requirements, the platform can model various resolution scenarios, estimate their costs, and provide clear reports. This helps you negotiate contract terms or decide whether to move forward with the transaction.
The platform also excels at analyzing Development Standards Districts to identify compliance issues that could limit a property’s potential. This ensures that underwriting reflects a property's highest and best use, making it easier to adjust financial models with precision.
Beyond the analytical tools, flexibility in service delivery makes due diligence even more efficient. You can access free financial models for straightforward survey data integration or work with a specialized team for complex issues like unrecorded easements or environmental challenges. These experts provide detailed zoning impact assessments and regulatory compliance insights tailored to your needs.
Real-time tracking and visualization tools further enhance the process by monitoring the resolution of survey issues, tracking costs, and keeping everyone - from lenders to investors - in the loop. This is especially useful for managing multiple survey challenges that require coordination among surveyors, legal teams, and local planning departments.
For asset managers, The Fractional Analyst extends its value by integrating survey data into property management. It evaluates how regulatory changes might affect property values and identifies zoning opportunities for future development. This long-term approach can uncover development potential that might not be immediately obvious.
Finally, the platform’s on-demand analyst services offer rapid support during tight due diligence timelines. Whether it’s assessing the impact of survey issues on deal structure, negotiating solutions with sellers, or updating financial models to reflect true resolution costs, The Fractional Analyst ensures you have the expertise you need, exactly when you need it.
Conclusion: Completing an Effective Survey Review Process
Bringing together the checklist and expert advice outlined earlier, conducting a thorough survey review is a crucial step in ensuring a smooth commercial real estate transaction. Often, the success of a deal - or the prevention of a costly mistake - hinges on the diligence applied during this process.
The checklist simplifies what could otherwise feel overwhelming. By systematically verifying legal descriptions, scrutinizing easements, spotting encroachments, and confirming access rights, you gain a clear understanding of the property you're acquiring.
Taking the time to thoroughly review surveys can save you tens of thousands of dollars by identifying and resolving issues before closing, rather than dealing with them afterward.
Today’s tools and expert services make this process easier than ever. Platforms like The Fractional Analyst transform raw survey data into actionable insights, showing not just what problems exist but also how they could affect your investment returns. By combining survey findings with financial modeling, you can better assess a property's true potential. Partnering with experts like The Fractional Analyst ensures every detail - whether it’s legal descriptions or potential environmental risks - is considered in your decision-making process.
Beyond the numbers, effective survey reviews build trust with everyone involved in the deal. Demonstrating thorough due diligence and proactively resolving issues strengthens your credibility with lenders, investors, and other stakeholders. This trust doesn’t just benefit the current transaction; it lays the groundwork for stronger relationships and smoother deals in the future.
Ultimately, survey reviews are about making smart, informed decisions. Sometimes that means recognizing when to walk away from a deal if the findings reveal unmanageable challenges. Other times, it’s about spotting hidden opportunities for adding value that might have gone unnoticed. Either way, a meticulous survey review ensures you're making the best possible choice for your investment.
FAQs
What risks can arise from skipping a detailed survey review in a commercial real estate transaction?
Skipping a detailed survey review during a commercial real estate (CRE) transaction can spell trouble. It opens the door to unexpected closing delays, legal disputes over boundaries or encroachments, and hidden physical or zoning problems. These issues can lead to hefty financial setbacks, forced renegotiations, or, in some cases, the collapse of the entire deal.
Taking the time for a thorough survey review is essential. It ensures the property is accurately valued, reduces potential risks, and protects the interests of both investors and buyers. Overlooking this step can jeopardize the transaction and leave stakeholders vulnerable to unnecessary liabilities.
How does The Fractional Analyst help address survey issues during CRE due diligence?
The Fractional Analyst plays a crucial role in tackling survey challenges during commercial real estate due diligence. They provide specialized financial analysis to uncover inconsistencies in property financials and underwriting assumptions. Additionally, their team assesses the reliability of sponsors and delivers insights that enhance property evaluations.
By simplifying the review process and reducing potential risks, The Fractional Analyst helps CRE professionals make better-informed decisions and facilitates smoother transactions.
What should I do if a survey uncovers unrecorded easements or boundary issues?
If a survey uncovers unrecorded easements or boundary issues, the first step is to confirm the findings with a licensed surveyor. Once verified, examine the property's legal descriptions and title documents to grasp the extent of the problem. Depending on the situation, resolving it may involve boundary retracement, drafting legal agreements, or taking corrective measures. Lastly, make sure to update property records to reflect the correct boundaries and easements.