Having a clear lay of the land in commercial real estate is more than just a bonus—it’s a necessity. While there are countless checkboxes to mark and details to comb through, nothing anchors a deal quite like an ALTA/NSPS Survey. This isn’t just any land map; it’s a cornerstone of decision-making, providing a comprehensive overview that empowers CRE stakeholders to act with confidence in their transactions.
What is an ALTA/NSPS Survey?
At its core, an ALTA/NSPS survey is much more than a simple map of a property. It’s a meticulous representation of a property’s permanent improvements, utilities, and observable features. These details, often unseen in traditional surveys, can make or break a commercial real estate transaction.
An ALTA/NSPS survey adheres to the standards jointly developed by the American Land Title Association (ALTA) and the National Society of Professional Surveyors (NSPS). Their most recent version, the “2021 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys,” guides surveyors in producing consistent, high-quality, and actionable insights for CRE stakeholders.
What is Needed for an ALTA Survey?
A licensed surveyor, well-versed in ALTA/NSPS standards, is essential. They utilize a combination of boundary, title, and location surveys to provide the thorough overview for ALTA/NSPS surveys. It’s important to note that the survey evolves, with ALTA and NSPS revising their joint standards every 5 years. States may also have their own set of standards that must be adhered to.
What is an ALTA Survey Used For?
An ALTA/NSPS survey provides exhaustive information for any commercial real estate transaction or even the purchase of vacant land poised for development. Its plays a role in unveiling potential risks and/or benefits of a property, ensuring all parties involved—lenders, title agents, buyers, and sellers are well-informed.
When is an ALTA/NSPS Survey Required?
Anytime there’s a CRE transaction, especially when a buyer is searching for a loan or a comprehensive title insurance policy, this survey comes into play. In fact, no lender in the U.S. will sanction a commercial loan without the comprehensive insights an ALTA/NSPS survey offers.
- Buying/Selling: At the heart of any significant commercial property transaction, be it a boutique store or a sprawling business complex, ALTA surveys play an essential role. For potential buyers, it offers a comprehensive snapshot of the property in question, highlighting any easements, rights-of-way, or potential encroachments. Sellers, on the other hand, can leverage the detailed insights from the survey to justify their property valuations and ensure a smoother transaction process.
- Refinancing: Lenders often require the latest details about a property before greenlighting a refinance to ensure their investment remains secure. The survey’s exhaustive nature ensures that all current details are available for review.
- Vacant Land: Vacant lands, often seen as blank canvases, carry their own set of complexities. Whether it’s unrecorded easements, boundary discrepancies, or other hidden complications, ALTA surveys serve as a detective, unraveling mysteries that might not be evident at first glance. This becomes crucial for potential buyers who are considering the land for specific purposes, as the survey can alert them to potential roadblocks or opportunities.
- Development Projects: Prior to laying the first brick or charting out a development project, it’s highly important to have an intricate knowledge of the land in question. The detailed survey shines light on aspects like property boundaries, existing structures, and rights of way, all of which shape the decisions on optimal land utilization.
How Much is an ALTA Survey?
The cost of ALTA/NSPS surveys isn’t one-size-fits-all. They can range from $2,500 to significant five-digit figures. Various factors like the property’s size, its location, the nature of improvements, and specific Table B Items influence the cost. A small parcel with a single building might be economical, while sprawling complexes or properties in certain states could elevate costs.
What Does an ALTA Survey Include?
An ALTA survey isn’t just a paper with lines and annotations. It’s a comprehensive snapshot, a story if you will, of a property at a given point in time, ensuring that CRE stakeholders have a clear and complete picture before making any decisions. Let’s unpack this survey a bit and dive into the many layers of an ALTA survey.
- Boundary Lines: Right at the forefront, the survey clearly delineates boundary lines as per legal descriptions, ensuring there’s no ambiguity about the property’s actual limits as stated in the title commitment.
- Monuments: No, we aren’t talking statues or landmarks. In surveying terms, monuments refer to physical markers—like metal rods or stones—that indicate property corners.
- Rights of Way and Access: Vital for understanding how a property can be accessed, this section details existing roads, paths, and other access points, along with any rights of way that others might have.
- Lines of Possession & Improvements: It’s not just about where the boundary is, but how it’s currently occupied. Fences, walls, and other boundary-related structures are highlighted here.
- Buildings – Location of Improvements: Think of this as a 5-foot buffer check. The survey scrutinizes areas both inside and outside the boundary (up to 5 feet) to capture any other notable features or improvements.
- Easements and Servitudes: These are the invisible threads that might give others certain rights on the property, like utility companies laying down lines or paths for public use.
- Above-Ground Utilities: Power lines, water towers, and other utilities that could impact property usage or value are noted.
- Encroachments: Essentially when something from a neighboring property “oversteps” into the subject property. While the survey won’t make a legal judgment, it flags these so stakeholders can take necessary actions.
- Evidence of Use by Other Parties: Think footpaths that have been treaded over time, suggesting usage by others. It’s an essential layer of info for potential developers or buyers.
- Names of Neighboring Property Owners – Zoning Classification: Each property is categorized based on its permissible use, be it commercial, residential, or mixed. This is vital for potential developers to understand the possible uses of the property.
- Flood Zone Classification: A must-know, especially for properties in areas prone to flooding. This data can influence building designs, insurance costs, and more.
- Water Features: Ponds, streams, lakes, or any water bodies within the property are captured. These can be aesthetic benefits or potential challenges, depending on their nature.
- Contiguity for Multiple Parcels: For properties spread across multiple parcels, this aspect ensures they’re all touching and coherent.
- Cemeteries: A rather unique aspect, but crucial. Some properties might have burial grounds, which can have both cultural and legal implications for development.
When do you Need an ALTA Survey:
Beyond mere compliance, the ALTA/NSPS survey is a safeguard for stakeholders. It brings to light potential hiccups in a transaction, ensuring you’re not caught off-guard. Whether you’re a buyer, seller, lender, or an insurer, this survey equips you with detailed information to make informed, strategic decisions. So, why exactly is the ALTA/NSPS survey a non-negotiable for CRE stakeholders?
- Validation of Property Descriptions: An ALTA/NSPS survey provides evidence, ensuring that the property description in the purchase agreement seamlessly aligns with the actual state of the property. It’s the bridge between paper promises and tangible reality.
- Exposing Encumbrances and Encroachments: While title searches can reveal legal encumbrances, an ALTA/NSPS survey goes a step further. It physically identifies title encumbrances and any encroachments on the property, offering a comprehensive view that helps stakeholders anticipate and address potential challenges.
- Meeting Lender and Insurer Prerequisites: In the vast majority of commercial transactions, an ALTA/NSPS survey isn’t just recommended; it’s demanded. Lenders and title insurers, in their bid to mitigate risks, often necessitate this survey. Fulfilling their criteria with an ALTA/NSPS survey not only soothes the transaction process but also often leads to the elimination of the survey exception in title insurance policies.
- Seamlessness with ALTA Title Insurance: The ALTA/NSPS survey is tailored to correspond perfectly with the requirements for an ALTA Title Insurance Policy. This ensures that the insurance coverage is robust and there are no gaps in understanding or protection.
No two properties are the same, and sometimes, what you see (or what you think you see) isn’t always the whole picture. Think of the ALTA/NSPS survey as that friend who notices all the small details you might miss. It’s not just some fancy map of a property, it shines a light on those hidden corners and details like permanent improvements, utilities, and other features that can easily slip under the radar. And trust us, in the CRE world, it’s these very details that can mean the difference between a sweet deal and a logistical nightmare. So, why should you, a savvy CRE stakeholder, care? Because knowledge is power. In an industry where stakes are sky-high and margins can be razor-thin, you want every advantage you can get. ALTA surveys equip you with a detailed lay of the land that can help streamline decisions, dodge potential pitfalls, and ultimately ensure that your investments are sound and secure.
If you haven’t yet integrated an ALTA/NSPS survey into your toolkit, now is the moment. Reach out to our team today to find out how ALTA Surveys impact your CRE strategy. Contact us today to learn more about how we can assist you in achieving your CRE goals.
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