Bulletin: NJ000036

Dear Associates:

The recent change in the Form 5-10 survey endorsement provides an opportunity for a review of the company's guidelines for issuing what is commonly referred to as "survey coverage". Like most colloquial expressions in our industry, the phrase "survey coverage" is somewhat of a misnomer. We do not insure the survey but rather insure against loss or damage from certain title defects or encumbrances which, if they exist, should have been disclosed by an accurate survey. Such title defects or encumbrances include encroachments, unrecorded easements and boundary line disputes. Elsewhere in the country the term "extended coverage" is used to refer to granting "survey coverage" (and other coverages). Both terms actually mean that the standard general survey exception is being removed from the policy and is being replaced with a more specific exception as to only title defects, if any, disclosed by the current survey.

But exactly what is a survey and which surveys are acceptable for the purpose of removing the standard survey exception from the policy? Who must prepare a survey? How accurate must it be? What must it show? How old can it be? Who must it have been prepared for? Do we always need a survey to give survey coverage? How do you properly examine a survey? As with most underwriting matters the answers to these questions often can only be answered in the factual context of the transaction being insured. Notwithstanding that, this memo will attempt to refresh your understanding of the guidelines to be followed when addressing these questions. Hopefully by following these guidelines you will be able to answer these questions for most transactions. In the more difficult or questionable matters please consult with the Company.

What is a survey?
Which surveys are acceptable for the purpose of removing the standard survey exception from the policy?
Who must prepare a survey?
How accurate must it be?
What must it show?

The term "survey" itself is another common term which is a misnomer. The word "survey" is really a verb, which means to inspect or investigate, in this context, a parcel of land. The drawing we are provided by the surveyor is more properly called a plan or map of the survey. A survey plan or map is a graphic two dimensional depiction of a parcel of real property intended to locate the parcel with certainty on the earth and disclose current improvements and conditions visible on the parcel with certainty on the earth and disclose current improvements and conditions visible on the property. It is sometimes called a "title survey" or "as built survey". Specifically it is a survey plan or map prepared by a licensed New Jersey surveyor, under his or her seal, prepared to the standards agreed to by the American Land Title Association (ALTA) and the American Congress on Surveying and Mapping (ACSM) in an agreement entitled Minimum Standard Detail Requirements and Classifications for ALTA/ACSM Land Title Surveys (last revised in 1997) and/or the surveying requirements set forth in the New Jersey State Administrative Code (hereinafter referred to as the "Standards"). In keeping with the common use of the term, in this memo, the term "survey" will mean the plan or map resulting from the surveying of the property.

Sometimes it is useful to define things by stating what they are not. A survey is not a filed map, map, minor subdivision map, a deed plotting either done manually or by computer, an aerial photograph or any other kind of drawing or map which does not meet the ALTA /ACSM standards or the standards set forth in the New Jersey Administrative Code.

The accuracy of a survey, that is how precise are the measurements, is a relative matter depending on the size and location of the property. The Standards recognize that survey of large undeveloped tracts do not need to meet the more specific measurement standards that are required for small parcels in urban locations.

What should be shown on the survey is also set forth in the Standards and these times include:

• distance and bearings;
  
  
• deviations in distance and bearings between the record description and the surveyed lines;
  
  
• the distance and bearing to the nearest public street intersection;
  
  
• access to a public right of way;
  
  
• identity of any filed maps affecting the property;
  
  
• any monuments found;
  
  
• location of buildings and property street address;
  
  
• easements;
  
  
• fences, walls and other structures within five feet of any boundary line;
  
  
• driveways, alleys on or crossing the property;
  
  
• evidence of burial grounds; and
  
  
• any water courses on the property

Surveys under seal prepared by licensed New Jersey surveyors performed in accordance with the ALTA/ACSM or New Jersey State Administrative Code are acceptable surveys to the company for the purpose of removing the standard survey exception form the policy.

How old can the survey be?

In most transactions both the lender and the Company require that the survey be dated contemporaneously with the transaction, which usually means within weeks of the closing date, but in no event older than six months. In the first instance the lender's requirements should be ascertained and complied with.

Where a lender is flexible, the date of an acceptable survey is a function of the reliability as to the survey accurately disclosing the present condition of the property. In other words, the purposes for which we are requiring the survey must be considered. We require the survey so that we can remove the survey exception and replace it with an exception that will accurately tell both the lender and/or buyer what title defects or encumbrances presently exist which can not be discovered from the public record and can only be discovered by physically surveying the property. Therefore depending on the location, size and physical improvements on the property, the age of an acceptable survey will vary. For example in a urban setting, a building may have been erected on the property at the turn of the century which occupies the entire lot. Under such circumstances a older survey would be acceptable with an affidavit of no change. On the other extreme, a large essentially undeveloped parcel with no physically defined boundary lines on the ground, would require a current survey. The question that must be asked is not "What is the date of the survey?", but rather "Does this survey accurately show the current condition of the property?".

The policy to be issued also must be considered when determining the acceptable age of a survey. For owner's coverage, the norm is a survey not older than six months; but surveys up to ten years old may be acceptable when coupled with an inspection and/or a survey affidavit of no change in certain circumstances. For lender's coverage, an even more lenient standard is applied (see discussion below of no-survey coverage).

Lastly, whether an older survey is acceptable will depend on what additional information is available to confirm that it depicts the current condition of the property. In residential matters a survey affidavit of no change is one method of confirming its accuracy. However, such affidavits must be viewed with caution. They are often executed by lay people who are not familiar with the technical nature of surveys, and often by the sellers who have a vested interest in seeing that the transaction closes. The key phrase in determining if an affidavit of no change is acceptable, is the phrase "no change". The affidavit is intended to be used only in those instances where the affiant can state that there has been no change in the physical condition of the property. This means, no new fences, plantings, additions, re-paved driveways, decks, sheds, etc. Have been added to the property from the date the survey was performed. In instances where any change has taken place, it is not appropriate to give owner's survey coverage based on an old survey.

Where for some reason an affidavit of no change is not available, an inspection may be substituted as a means of confirming no change has taken place. Such inspections must be performed by knowledgeable personnel of your agency and should be documented by photographs or field notes on a copy of the old survey which are kept in the file.

In commercial transactions old surveys are rarely acceptable and you must consult with the Company.

Who must I have been prepared for?

When a new survey is being made contemporaneously with the transaction it must be "certified" to the parties that will be relying on the accuracy of the survey in completing the transaction. The "certified " parties are those parties that the surveyor is recognizing as parties that are relying upon his work and to whom he will be responsible if an error is made. The ALTA/ACSM standards provide for specific language to be used in certifying the survey and the suggested language should be used on surveys for high liability transactions. Less formal language is customarily found on residential surveys. The survey should name the buyer(s), the new lender and Stewart Title Guaranty Company. Additional parties sometimes named are the title agency and closing attorney. The New Jersey regulations require that all survey maps be under raised seal (NJAC 13:40-1.1). Therefore, you may not accept a new survey that does not have a raised seal. The absence of the seal may mean that it is not a final survey or that for some reason the surveyor is not certifying as to the accuracy of the survey.

When an old survey is being relied upon it is not always possible to obtain a print with raised seal, but every effort should be used to make sure that the copy being relied upon is a final survey and not a preliminary draft. Similarly, there is no ability to change the certification when a old survey is being used. However, you should confirm that the parties to whom the survey is certified were parties in interest at the time the survey was done.

Do we always need a survey to give survey coverage?
What is no survey-survey coverage?

The company no longer requires a survey in order to give survey coverage as to survey matters in Loan Policies issued on 1-4 residential properties. The survey exception may be deleted without any additional requirements. Of course, you would continue to except to easements of record and any unrecorded easements of which you have knowledge, either by virtue of an old survey coming into your possession, your search, or information obtained from a starter policy which conforms to the company's requirements. These 1-4 residential policies must be on parcels located either on filed subdivision maps or contain acreage of under 25 acres.

In addition, the company no longer requires a survey in order to give survey coverage as to survey matters in Loan Policies issued on commercial transaction with liabilities of $1,000,000.00 and under. Exceptions should be taken for known matters as outlined above.

Form No. 5-37 Survey Endorsement (Without Survey) should be used to give this coverage.

These guidelines apply only to Loan policies. Owner's policies and Construction Loan Polices still require current surveys certified to the Company.

How do you property examine a survey or "read in" a survey?

The standard survey exception should only be omitted from either a policy or commitment by use of the survey endorsements (Form 5-01, Rev. 3/2/98 or Form No. 5-37). It is improper to "read in" the survey into Schedule B Section II of the commitment or Schedule B of either the loan or owners policy. Attached is a partial check list of items to be reviewed and considered when examining a survey and preparing a survey endorsement. Generally any easement, encroachment, boundary line matter or other matter which would indicate that someone other than the owner may have an interest, right or claim in or to the property should be noted as an excepted matter in the survey endorsement.

For additional information as to survey coverage, refer to the Company's Virtual Underwriter or please call the state office for further clarification.