Before you purchase your home – a legal survey or title insurance?
Summary
You’re about to buy a property. One of the decisions that must be made in organizing this purchase is whether to require a survey for full disclosure of the extent of title of the property, before the transaction, for your own information and for financing approval, or to simply buy insurance against defects in title in order to get the release of mortgage funds. Your choice depends on the type of property being acquired, the level of comfort you have in buying a home without a full understanding of the potential disputes or problems regarding its use and the type of assurance a lender may require before releasing funds.
Full disclosure of extent of title can be obtained through the purchase of a Surveyor’s Real Property Report. Contact our team to get an estimate of a Surveyor's Real Property Report at your property.
Who Needs an SRPR? Owners, Buyers, Sellers and Realtors can use this document to clarify property title.
Property Owners
- the extent of the property being purchased is the same as described in the Offer to Purchase
- the boundary location is known, and the deed describes the property accurately.
- pertinent fences, trees, buildings, driveways, additions, and improvements, etc. are sited in accordance with municipal by-laws and within the boundaries.
- others are not entitled to partial use of property through easements or rights-of-way.
- the mortgage will proceed without delays.
- future projects will not be impeded by the inability to locate the property limits or acquire a building permit.
Sellers/Buyers
- confidence in the purchase for the buyer by verifying the size and extent of the property.
- protection from potential lawsuits resulting from problems related to property boundaries and improvements.
Realtors
- a visual representation of the property for sale
- information to avoid delays in completing property transactions.
- protection from potential lawsuits resulting from misrepresentation in the Offer to Purchase related to property boundaries and improvements
What is an SRPR? An SRPR will show property and title information.
SRPRs contain critical property information including:
- the address and legal description of the property
- dimensions and location of property boundaries
- location of all buildings relative to property boundaries
- location of adjacent properties, roads, lanes, etc.
- location and description of all pertinent improvements on the property, along with the setbacks to the property boundaries. The projections of overhangs and eaves may also be noted.
- type and location of any land-related encumbrances or interests on the property title including utility rights-of-way, roadways, neighbour’s rights-of-access, etc.
- location of survey bars marking the property corners
- a note indicating for whom the plan is prepared
- certification by an Ontario Land Surveyor
- the Association of Ontario Land Surveyors Plan Submission Form with the original signature and embossed seal of the OLS preparing the report.
HOW IS IT PREPARED?
The following tasks are undertaken to prepare the Surveyor’s Real Property Report:
- a search of title of the subject and abutting properties
- a search of all pertinent encumbrances registered against title of the subject property
- a search of other surveyor’s offices to obtain all plans relating to location of boundaries of the subject property
- a field survey to determine the actual dimensions of the property, the location of improvements and the setting of corner markers
- an analysis of research and field data
- the preparation of the plan illustrating the results of the field survey
What about Title Insurance? A title insurance policy can be purchased as an SRPR.
A Title Insurance Policy can be purchased, as an alternative to a Surveyor’s Real Property Report, to insure your lender or yourself against any loss occasioned by a defect in title or an adverse claim. The lender’s interest is generally only exercised if a property is foreclosed and the lender is unable to market the property for the amount owing on the mortgage due to a flaw in the quality or extent of title. The property owner, if included as an insured party, is protected against loss if there is a claim against the property as a result of a flaw in title or an encroachment or similar circumstance. If there is a problem, it generally remains undisclosed until a claim or action is begun, at which time the insured must demonstrate a financial loss in order to be compensated.
A Title Insurance policy provides no information to the purchaser of a property about specific details of the property, although the insurer will have had access to a lawyer’s report and may have had a cursory inspection of the property made, before issuing the policy. If there are potential problems, the insurer may require a survey to be undertaken or may exclude the potential problem from coverage.
Construction
Newly built homes should have a survey completed during construction as part of the building permit process and this plan of survey would normally be part of the disclosure material provided by the vendor prior to closing. Don’t mistake the Building Permit Sketch, which is a proposed location, for a Surveyor’s Real Property Report, which shows the final location of all structures. Also, as an owner of a new home you should insist on having your property boundaries marked out at the time of purchase. Survey monuments tend to get lost during construction or final grading. For existing homes, the first survey made when the building was under construction, may not show fences, hedges, outbuildings, additions, decks and other features that may have been added over time. Only a survey and report in the form of a Surveyor’s Real Property Report and a review of this title by a lawyer can assure a purchaser that there are no potential problems or contentious issues that need to be resolved.
Conclusion
A Surveyor’s Real Property Report may cost more than a Title Insurance policy, depending on the type and value of the property. The cost of the survey is usually a small percentage of your total investment and a reasonable price to pay for your protection and peace of mind. A Title Insurance policy is usually purchased to cover the term of mortgage, and must be renewed, for an additional premium, each time the mortgage is renegotiated or renewed.
Your decision on the course of action you propose is a personal choice. Prudent purchasers should get as much information as possible about a prospective purchase before committing their funds.
