Understanding ALTA Surveys: A Key Component in Commercial Title Insurance

When purchasing or financing commercial real estate, an ALTA survey is an integral element in the title insurance process. But what does it encompass — and why is it so important?

An ALTA  (American Land Title Association) survey is a detailed property evaluation that identifies precise boundary lines, easements, rights-of-way, improvements, encroachments, potential encumbrances, and other specifications of a commercial property. It provides vital information for the title insurer to assess risks and issue a comprehensive policy.

In conjunction with the National Society of Professional Surveyors (NSPS) and the American Congress of Surveying and Mapping (ACSM), ALTA first codified the Minimum Standard Detail Requirements for Land Title Surveys in the 1960s, and the ALTA/NSPS Land Survey Work Group reviews and updates these guidelines every 5 years. 

Let’s take a closer look at this essential aspect of commercial real estate transactions and how to help your clients navigate to a successful closing.

A Crucial Safeguard

For commercial real estate transactions, title insurance serves as a vital protection against unforeseen liabilities and defects in title. ALTA surveys play a pivotal role in this process by providing comprehensive documentation of the property’s physical and legal characteristics. 

By detailing site elements, adverse possession, disputes, and any easements or encroachments from adjoining properties, the survey allows the title company to pinpoint risks that could leave the buyer vulnerable. This includes surface issues as well as subsurface rights.

The survey also provides critical documentation for the lender by delivering an accurate record of the current site conditions to hold as collateral, which protects their security interest in the property. 

For renovations, expansions, or new construction, the ALTA survey process helps the owner/ developer get approvals by providing essential site details, such as zoning classifications, floodplains, sensitive wetlands, and the possibility of environmental challenges. Buildings, structures, and other improvements on the property are also surveyed to assess their location, dimensions, and compliance with local regulations.

ALTA surveys are often conducted in conjunction with a review of the title commitment, allowing for the identification of defects or unresolved issues that may affect the property’s marketability. By compiling precise measurements and boundaries before the sale, this report delivers a point of comparison for resurveys during ownership and defense against future encroachments or title claims. 

Requirements and Benefits

In Wisconsin and the Chicagoland area, where the real estate market is highly dynamic and regulations are stringent, clients who are on the hunt for income-producing properties should pursue every avenue of due diligence before making a major investment decision. 

ALTA surveys enable stakeholders to address potential headaches proactively and reduce the likelihood of costly disputes or delays. The comprehensive documentation of the property’s characteristics empowers buyers and lenders to move quickly, which can be a distinct advantage in the current Upper Midwest CRE environment

In both Illinois and Wisconsin, expert surveyors abide by the 2021 Minimum Standard Requirements for ALTA/ NSPS Land Title Surveys. Clients, insurers, insureds, and lenders rely on these highly trained practitioners to “conduct surveys and prepare associated plats or maps that are of a professional quality and appropriately uniform, complete, and accurate.” Their complete report includes:

  • On-site fieldwork pursuant to Section 5, regarding monuments, right of way, vehicle access, boundaries, buildings, easements, and servitudes
  • Presence of cemeteries, burial grounds, or water features.
  • The preparation of a plat or map according to Section 6, containing boundaries, descriptions, dimensions, and closures. 
  • Relationship to records research as recommended in Section 4.
  • Deliverables under Table A, Optional Survey Responsibilities and Specifications.
  • The standardized certification as outlined in Section 7, sealed with surveyor’s signature and license number.

Clear and accurate survey data streamlines the transaction process, expediting negotiations, financing, and closing procedures. 

Best Practices

ALTA surveys serve as a valuable resource for commercial real estate buyers, offering a detailed record of the property’s status for future reference and potential resale. Initiating the survey process as early as possible in the transaction timeline will allow your clients plenty of time for the resolution of any issues that may arise.

Collaborating with experienced title insurance professionals who are familiar with local regulations and market conditions will help ensure project compliance and risk mitigation. 

By assessing title defects as well as potential on-site hazards upfront, insurers can tailor appropriate title insurance protection, and protect the interests of your valuable CRE clients. Expand your horizons and take advantage of new opportunities — reach out to the team at Landtrust today!

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