Great question and one I am asking. I scratched my head for the second time in 6 months about issues of land that exist but were not discovered or mentioned until, yes you got, the closing table.
Disclaimer: I am not an attorney and this is not legal advice. I am simply questioning a process.
Briefly, for single family homes you are buying a piece of land both under the house and in most cases surrounding the house. Call it your yard if you will. And there are some obscurities that come with land not visible to the naked eye. Here in Barrington and most of the surrounding towns and villages in Northern Illinois, a plat of survey will be ordered in the last few days prior to closing. At closing it is likely to be the final thing to be looked at. Looked at after you’ve signed all the loan documents, after other papers.
WHY! I believe this is a flawed way of doing things although I understand why surveys are ordered very late. I just don’t agree with it from the buyers standpoint. So let’s look at both scenarios. Both homes have closed and were my buyers.
Woodstock Horse Property With 5 Acres
My buyers find the perfect property. The location is very country, the acreage is right, the zoning allows horses and indeed the neighbor properties had horses too. The lot shape is literally a triangle. At the back side there are towering trees lining the new homestead. Gorgeous. It was not fenced and did not have a horse barn but the buyers liked the property so much they were willing to add those when the time came. That back edge of the property would be perfect, with plenty of grass to turn into a pasture and the trees would provide plenty of shade during the hot summer.
Two months pass and we’re at the closing. All the loan documents are signed, all the paperwork complete and out comes the survey.
Surveys are important, the title company is going to be insuring a new owner’s clear title to the land space.
A plat of survey shows the boundaries to a property, and buildings on the land, any “setbacks” or easements. Anything that is going to affect a new owner’s ability to make changes. For example a building setback means you cannot build in the space beyond the setback, usually because of utility easements from the electric or gas companies, TV cable companies. Or simply so you don’t extend a building too far forward on the property. It can also show buildings on the property that maybe should not be there.
A few years back in Kildeer IL, a plat revealed that a neighbor’s swimming pool had it’s surrounding patio built on the neighbor’s lot. The neighbor was selling to our buyer. You get the idea.
Back to Woodstock – Imagine the buyers surprise to find an easement across the back of their new property, and a big one. It ran all away along that back edge. It was something like 50 feet deep. (Cannot remember the exact depth). That easement prevents anything from being built on that part of the lot because there was a utility line running underneath it. Let it be said the buyers could if they wanted to build the barn and horse fences on the easement. However the utility company can dig it up at will should it be needed. That’s what an easement allows.
And this at the closing table!
I don’t know if this could have been established in the legal sense prior to closing because I am not an attorney and I do not deal with the legal parts of a sale. That said the seller knew about it and they never mentioned it. Tell me how this is right? (Read on for what’s in the contract that references this.)
Unincorporated Barrington with 2.9 Acres
A property is pulling at the heart strings of my buyers because of all the land they are getting. Relocating from a city where they live on patches, 2.9 acres seems huge. They decide to buy. The contract states 2.9 acres. The seller also happens to own the neighboring house, also for sale. Both are reached via a long gravel driveway, set back from the main street and adjacent to a lake that’s big enough to kayak on. For out doors type buyers it’s a dream. At the end of the gravel drive it splits into two driveways one for each house. Logically you would think as the drive splits so do the land parcels.
NO! It turns out that just under a half acre of my buyers new property sites right on top of the other homes driveway. So after the loan docs are signed that magic plat of survey comes out. What to do with that land. It’s an easement right on top of the neighbors driveway, he needs the easement to get to his house. So it was decided to give that almost half acre to the other property. This was being done prior to closing, with absolutely no involvement of the buyer. That I believe to have been the wrong decision, to not even tell the buyer or explain why until the last part of the closing!
So the buyer now is getting 2.36 acres not 2.9 acres. He contracted to buy the house at 2.9 acres and now is finding out it’s not what he is getting. Remember he comes from a land of patch sized yards. The discussion that ensues as you might imagine is not what any buyer expects at his closing. Granted it’s quite a lot of legal work to get all this organized prior to closing. The properties both get new parcel numbers, but the title company is good to insure both my buyers and what will become another buyers for the other home.
BUT. The listing agent his history with this area, she lived on part of the original larger parcel. She must have had some knowledge of this, or that something might exist. One home is much younger that the other, it was clearly split off and a new home built. The seller must have known something about the oddities of his land. Come on folks, you’re not dumb! So why is this not disclosed?
Summary Judgement – Well Mine Anyway
Given all of the above, I have to question why things are done this way. Why these issues become apparent at the closing table. It clearly did not affect the sellers but did affect the buyers. Is there an issue with not asking sellers these questions when they list property for sale. And even if we did, should they declare them? I believe the answer is always yes. The reality is a buyer gets to the closing table and has no way out. Maybe there is a legal way to resolve them, I don’t know. Obviously I was attending the two closings and I do know of the conversations that ensued with buyers and attorneys, but have no reason to divulge them. I am simply trying to make a point here.
For the record, the plats of survey are ordered close to closing because the title companies are taking on the risk of insuring the title for a new owner. If they use old surveys things may have changed, a lot. So close to closing it must be.
I just think a buyer is the one who loses here and that’s not good in my book.
Let’s Look at That Purchase Contract! Was either seller required to let us know?
23. SELLER REPRESENTATIONS: Seller’s representations contained in this paragraph shall survive the Closing. Seller represents that with respect to the Real Estate Seller has no knowledge of nor has Seller received any written notice from any association or governmental entity regarding:
- a) zoning, building, fire or health code violations that have not been corrected;
- b) any pending rezoning; Possibly seller did know or had an idea, but then again maybe not. Difficult to judge.
- c) boundary line disputes;
- d) any pending condemnation or Eminent Domain proceeding;
- e) easements or claims of easements not shown on the public records; Likely this was on public records but buyer gets to know at least minute, given the type of property I feel it should be mentioned beforehand.
- f) any hazardous waste on the Real Estate;
- g) any improvements to the Real Estate for which the required initial and final permits were not obtained;
- h) any improvements to the Real Estate which are not included in full in the determination of the most recent tax assessment; or
- i) any improvements to the Real Estate which are eligible for the home improvement tax exemption.
For The Record – That Part Of The Purchase Contract That Addresses The Plat of Survey and Title
18. TITLE: At Seller’s expense, Seller will deliver or cause to be delivered to Buyer or Buyer’s attorney within customary time limitations and sufficiently in advance of Closing, as evidence of title in Seller or Grantor, a title commitment for an ALTA title insurance policy in the amount of the Purchase Price with extended coverage by a title company licensed to operate in the State of Illinois, issued on or subsequent to the Date of Acceptance, subject only to items listed in Paragraph 16. The requirement to provide extended coverage shall not apply if the Real Estate is vacant land. The commitment for title insurance furnished by Seller will be presumptive evidence of good and merchantable title as therein shown, subject only to the exceptions therein stated. If the title commitment discloses any unpermitted exceptions or if the Plat of Survey shows any encroachments or other survey matters that are not acceptable to Buyer, then Seller shall have said exceptions, survey matters or encroachments removed, or have the title insurer commit to either insure against loss or damage that may result from such exceptions or survey matters or insure against any court-ordered removal of the encroachments. If Seller fails to have such exceptions waived or insured over prior to Closing, Buyer may elect to take title as it then is with the right to deduct from the Purchase Price prior encumbrances of a definite or ascertainable amount. Seller shall furnish Buyer at Closing an Affidavit of Title covering the date of Closing, and shall sign any other customary forms required for issuance of an ALTA Insurance Policy.
19. PLAT OF SURVEY: Not less than one (1) Business Day prior to Closing, except where the Real Estate is a condominium (see Paragraph 15) Seller shall, at Seller’s expense, furnish to Buyer or Buyer’s attorney a Plat of Survey that conforms to the current Minimum Standard of Practice for boundary surveys, is dated not more than six (6) months prior to the date of Closing, and is prepared by a professional land surveyor licensed to practice land surveying under the laws of the State of Illinois. The Plat of Survey shall show visible evidence of improvements, rights of way, easements, use and measurements of all parcel lines. The land surveyor shall set monuments or witness corners at all accessible corners of the land. All such corners shall also be visibly staked or flagged. The Plat of Survey shall include the following statement placed near the professional land surveyor’s seal and signature: “This professional service conforms to the current Illinois Minimum Standards for a boundary survey.” A Mortgage Inspection, as defined, is not a boundary survey and is not acceptable.
Buyers and Sellers – Read and Understand The Contract
If you are buying real estate it’s a mandatory read, our contract is long and a lot of it may well be boiler plate. But buyers should know what’s in it. Brokers have a duty to go through a contract to purchase with sellers and buyers before they sign. Ultimately the buyers and sellers are the ones signing and contracting.
IMHO – Sellers have a duty to at least provide the survey the got when they bought the property; it’s what was insured by the title company at the time, but also reveals easements at that time. Dig it out and give it to your Realtor! Leave a copy on the dining room table. Be pro-active.
Corinne focuses her business on the real estate lifestyles she personally has a passion for. Combining her love for the countryside with equestrian properties and luxury homes isn’t just something she does, it’s where her affinity lies. If you are thinking of buying in Barrington or relocating to the Barrington area, give her a call at 847-363-3686 or drop her a line.