Purchasing a home, cottage or other property can be a daunting experience, given the number of decisions that must be made in selecting and financing a property, particularly when the purchase of a property is dependent on the sale of an existing home.

One of the decisions that must be made in organizing such a purchase is whether to obtain a survey for the purpose of full disclosure as to the extent of title, or just for one's own information, or for financing approval, or to simply buy insurance against defects in title in order to get the release of mortgage funds.

A Survey is the Only Way to Know the Exact Limits of the Property You are Purchasing.

A full disclosure of the extent of the title can be obtained through the purchase of a Surveyor's Real Property Report.

This is comprised of a plan of survey and written report based on the actual survey of the property and research into the title records for the existence of any easements, right-of-ways or restrictions that might affect the property.

An up-to-date survey shows the position of the building(s) on the site, the fences, hedges, outbuildings, driveways, decks and retaining walls.

The written part of the survey, or report, draws attention to any issues or potential problems discovered during the survey.

The integrity of the Real Property Report is assured through the mandatory professional liability insurance carried by the surveyor.

The Real Property Report can be used to ensure that the buildings and improvements are sited in accordance with municipal by-laws. In combination with the lawyer's opinion of title, this report can be used to satisfy the lender that the property is marketable and suitable for mortgaging.

If the Real Property Report reveals problems with the title of the property or with the position of improvements such as fences or outbuildings, a purchaser could require the vendor to rectify the problems before closing the deal or might be able to negotiate a reduction in the purchase price to provide for the potential costs of rectifying the problem.

One would also have the option, if warranted by the information revealed by the survey, to buy an insurance policy as additional protection.

Title Insurance: Simply put, title insurance is a policy covering title defects and related risks with real estate transactions.

It is insurance designed to cover the unpredictable or undetectable issues such as forgery, fraud, missing heirs, etc that can affect the rights of ownership.

Title insurance covers defects in title such as conflicting ownership of the land or mortgages, it also covers compliance risks such as noncompliance with restrictive covenants, the existence of work orders and encroachments.

SURVEY VS. TITLE INSURANCE

Cost. A Surveyor's Real Property Report usually costs more than a Title Insurance policy.

A Title Insurance policy is usually purchased to cover the term of a mortgage, and must be renewed, for an additional premium, each time the mortgage is re-negotiated or renewed.

Disclosure. A Surveyor's Real Property Report discloses all pertinent information about the boundaries of the property and the extent of occupation, the location of easements or rights-of-way, if any, and the possibility of adverse claims through long standing adverse occupation or encroachments.

A Title Insurance policy does not disclose any information about the property, but insures against demonstrated loss, if such occurs.

Caveat Emptor. A purchaser can be forewarned, by a lawyer's opinion of title and a Surveyor's Real Property Report, if there are problems with the quality and extent of title before completing a purchase and can requisition remedies to the problems, if any, before closing the transaction.

A title insurance policy, which is issued by an insurer on the basis of a lawyers report without reference to an up-to-date survey, does not provide any information about a property to an owner or lender.

Any problems that might have been revealed by an up-to-date survey are often excluded from coverage and are passed on to the uninformed purchaser or lender, to be resolved by them at a later date.

Future Date. Where a home buyer intends to make improvements on a newly purchased property, such as erecting or renewing fences, extending the building or adding out-buildings or decks, a survey may be required for either locating the property limits or for acquiring a building permit.

Having the vendor provide the survey before closing the transaction aids in the transaction and provides the information needed for future projects on the property.

Peace of Mind. Your decision on a course of action, from full disclosure about the new property to simply insuring your home against loss in the event of problems, is a personal choice.

We believe that prudent purchasers should get as much information as possible about a prospective purchase before committing their funds, for their protection and peace of mind. We further recommend speaking with a good lawyer on this issue.