photo courtesy of blmurch
What is a survey?
First let's get the concept of "survey" out of the way. Merriam-Webster defines survey as "2 : to determine and delineate the form, extent, and position of (as a tract of land) by taking linear and angular measurements and by applying the principles of geometry and trigonometry." Think of it as a map of your property marking property lines, easements, buildings, and setbacks. It shows the truest picture of what the layout of your land is and defines what you actually own when it comes to a piece of land.
Alright, so who's paying for it?
Like most things in a Texas contract to purchase a one to four family residence, the cost of a survey is determined during the offer and negotiations on a new home. There are several checkboxes that determine who pays for the survey. On more than one occasion I have seen an experienced agent check a box incorrectly which later cost their client money.
Paragraph 6. C (2) and (3).
Let's cover (2) and (3) first as they are very simple. The blank spot in both is for a number - the number of days after the effective date of the contract with which a buyer or seller must obtain a new survey. Pretty straightforward. (2) is for the buyer paying for the new survey and (3) is for the seller paying for the new survey (told you it was simple).
Paragraph 6. C (1).
This is where I see mistakes most often. This section lays out the rules and is typically used when a survey already exists on the home and both parties would prefer to use the older survey for some cost savings. Your agent and you (the buyer) should be looking at the existing survey though, if any major changes have been made (new pool, deck, shed, fence lines, etc.) you'll want a new survey. This will help you when you sell the house someday and also make sure that you know the official layout of your land and home.
If both parties are going to try to use the older survey, caution should be taken by the agents (as I said I see a lot of mistakes made here). The first section of (1) is for the number of days for the seller to present the survey to the the buyer and the title company. The set of checkboxes who (buyer or seller) will pay for the survey if it is deemed not acceptable by the title company or the buyer's lender. It clearly spells out that they (buyer or seller) must obtain it no later than three day prior to the closing date.
Here's where the mistake is made. The section in bold (in the contract, bold below indicates my emphasis) that reads:
If Seller fails to furnish the existing survey or Affidavit within the time prescribed, Buyer shall obtain a new survey at Seller's expense no later than 3 days prior to the Closing Date.
I have seen several times where we thought there was a survey and checked off C (1) and asked for the seller to pay for the survey. During negotiations, the seller's agent suggested the buyer pay for the survey and we agreed. However, when we received the signed contract back, they had merely crossed off the seller's checkbox and checked the buyer's checkbox. This is fine, if the seller does indeed have a survey, but if they do not or forget to supply one in the prescribed time, the last sentence becomes the most important one in C (1). Because the seller failed to provide a survey (whether they didn't have one or didn't perform their duties in a timely manner), the buyer now has the right to order one and have it conducted - and the seller has to pay for it.
Your agent should be aware of this, but as I've said previously, I have seen it happen more than once (when I was on the buyer's side of the transaction - it didn't make the seller very happy with their agent, but my buyer loved me for it). Knowing your contracts can really pay off for your clients and really should be a no-brainer for an agent.
This is a post in a series on real estate education to help define some of the finer points of contracts and the process of buying and selling real estate in San Antonio, Texas (it's Texas real estate, so if you live outside of Texas, these articles may not apply to you). You can read the previous posts; "Realtor® Speak 102: What are all these charges on my HUD-1 Settlement Statement?," "Realtor® Speak 102: What do I need to bring to closing?," "Realtor® Speak 102: Does that come with the house?," and "Realtor® Speak 102: What if the house burns down?" or check out my ongoing series Realtor® Speak 101 at RErockstar.com.
All content ©2008-2010 by Matt Stigliano unless otherwise noted.
Matt Stigliano, Realtor® Becker Properties | (210) 646-HOME | www.RErockstar.com
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It often surprises me to see how carelessly some offers are filled out. As a result I'm overly cautious when I write one up, but I think that's a good thing.
Matt - I have seen this a lot on offers, too. Sometimes, they leave the second box completely blank.
Ann - I don't think you can be too cautious on contracts. The simple fact is that people do make mistakes - and this business is not too forgiving of errors (especially when it comes to contracts). Checking over them helps prevent those mistakes.
Jason - I've had it work to my advantage in a contract. Seller crossed off "seller" and checked "buyer." When they didn't deliver a survey, I called the agent on it. His response? "But it says the buyer will pay for it." My response? "Read the last sentence in the paragraph." Guess who didn't pay for a survey?
Matt,
A huge producer in our area made this mistake with me once. I explained that no, HIS SELLER was responsible because NO SURVE was provided. In the end, the heavy hitting agent paid for it because of his error.
He was very angry sighting.. "you know what I meant!" He sent me 10 paragraph rant about how I will need him, as he has many, many buyers and that he would never show my listings!
Greg - You should have sent him back a one sentence answer:
You not showing my listings isn't really looking out for your clients' best interest, is it?
Matt,
Well said. I would add that if 6 C 1 is checked it is just as important that the T 47 affidavit be provided as the survey. Some title companies had told agents "don't worry about that we will handle at closing".
Hi Matt:
It's so interesting how different states handle different parts of a real estate transaction.
Here in NJ, the survey is always the buyer's responsibility....unless it's part of a negotiation.
Here, the most commonly checked box is "Buyer waives right to conduct survey"
Hey Matt! I'm back to wish you a belated Happy Birthday.....sorry I'm late!
I've had that go in my buyers' favor a couple of times too. The first time it happened, I was like, "Really? That's how it's interpretted? Cool!" From then on, if I have a seller and they can't produce the survey and they'll "look for it", I never allow box 1 to be checked!
Richard - I hate getting that thing done, but I do everytime. My guess is the title companies figure they can notarize it for them at the office. I'd rather know they got it done right away!
Toula - It is interesting as sometimes while reading someone else's blog I find myself thinking "WHAT?" Then I realize their state just does things a little differently than we do.
Erik - That's great proof of what Toula's talking about. No survey? Good luck getting a loan around these parts without one.
Ann - Awesome! Thanks. It was a great one.
Donna - I remember walking into my broker's office wondering if it was that way as far as I was reading it or perhaps I was just insane. We sat and talked (he loved talking theory on contracts and knew a lot of case law involved in the minute details). Turned out I was correct. As a new agent, I was pretty excited.
If there is a recent survey, I like to have a copy in the listing folder along with a copy of the septic permit. I find that this eliminates problem further downstream because no one has to wait while the seller "looks for it" or "tries to get it." If it's my listing, I want to be prepared to MARKET the property and field any questions that may arise with accurate, documented information. If it's my buyer....I expect the other agent to be equally prepared. (In a perfect world....)
THis is good information; thanks! Luckily, I'm sell horse properties in an area where there are several equestrian communities and the parcels have all been surveyed.
Leslie - No matter which side I'm dealing with, the survey is one of the first things I get cracking on. I want to see it in my hands and not "yeah, we have one." We have a lot of subdivisions here in town, so most people have had a survey - it's just whether they can remember where they put it after closing. I keep all of my clients' surveys on file and tell them in the future if they need one to call me - even if they decide to work with someone else to sell their home, I'd rather they didn't have to pay the extra money to get a new one if they didn't have to.