Featured Article: The $1,200 Lot Survey That Did More Harm Than Good

Introduction

I’ve always told my friends and family to call me before they purchase real estate. For most people real estate is a huge investment, and a huge risk. I offer to check the land title report, vesting deed, survey records, and tax assessor data for problems, at not cost. People rarely call me before a purchase. (They usually call me after the purchase, when they’ve discovered a problem.

The Request For Help

Cheri worked with me as a drafter at a civil engineering firm several years ago. Her mom Pat was purchasing a parcel up in Sonora, California, a town in the Sierra Nevada Foothills. Cheri was different from most of my friends and family. She didn’t wait until after the purchase of the real estate for her mom to call me for help. Cheri asked me to look over the title report for any problems before escrow closed on the purchase.

I told Cheri I would be happy to help. We obtained a copy of her vesting deed, reviewed it, looked over the title report she provided, and pulled all the filed survey maps at the County Surveyor in the parcel’s neighborhood. We also pulled the tax assessor data and reviewed the tax assessor parcel lines over recent satellite photography in the GIS provided by one of our land title company partners.

Good News From The Survey Land Records

I was surprised at what the survey land records told us. The parcel had been surveyed in the last 30 years and the property corner monuments had all been set. The surveyed parcel matched the tax assessor map, the vesting deed land description, and the insured land description in the land title report. It seemed like a low risk transaction, except for one problem revealed by the tax assessor parcel data.

Red Flag On The Tax Assessor Data

When we examined the GIS parcel data from the title company, we could see a large fence encroachment into the subject parcel from a northern neighbor. It looked like they also had a very expensive multi-bedroom residence that was within the building setback and quite possibly crossing the parcel boundary. GIS data like this is often inaccurate, but we needed to look closer at this potential problem before Cheri’s mom closed escrow.

I called Cheri and told her about the potential problem. I asked her to call her Mom’s real estate agent to see if she was aware their might be a significant property line encroachment. I told Cheri that Pat should hold off on the purchase until we got things figured out.

First Conversations With The Real Estate Agent

Cheri called me a couple of days later about the results of her conversation with the real estate agent. The agent said she was aware that there was some type of fence encroachment on the north side of the subject parcel, but assured Cheri and Pat this was “no big deal” and shouldn’t hold up the sale. She said: “all the neighbors are aware the fence is in the wrong spot and they are all OK with it”.

I was shocked at the way the real estate agent dismissed the major problem with an encroachment over the parcel boundary. Especially when the encroachment could involve a structure worth hundreds of thousands of dollars. I pressed Cheri about the conversation: “Did your mom’s real estate agent talk to the seller’s real estate agent about the problem? What did the seller’s agent say?”

Cheri told me the real estate agent was representing both her mom and the seller.

Now things started to make more sense. The agent was acting in a dual agency role, and didn’t want to lose the sale on the parcel because of the problem we’d discovered. “Have your mom tell the agent she isn’t buying without a survey and resolution of the encroachment.” I told Cheri.

The $1,200 Survey

After a few days, Cheri called me back. She told me the seller had agreed to split the cost of a survey with Pat. The survey had been provided to the real estate agent, Pat, and Cheri. But Cheri was confused. She didn’t think the survey told her what she needed to know about the possible encroachments.

I asked her to send me the survey. It showed up in my inbox that afternoon. It was a one sheet survey prepared on letter size paper, but some land surveyor I’d never heard of. There was no company name on the survey. The survey showed a fence, but no distances from the fence to the property line. The survey didn’t show the footprint of the house at all. It also didn’t show the building setback on either side of the property line. I quickly called Cheri about the survey. “How much did your mom and the seller pay for this survey?” I asked.

$1,200. That was the cost of the survey. A survey that answered none of the important questions we needed to resolve before escrow closed.

I asked Cheri what the real estate agent said about the survey. “She thought it looked good and wanted to know if we were ready to close the sale.” Cheri said.

Now I was starting to get angry. I told Cheri to call back the real estate agent that afternoon. “Tell the real estate agent she cost you a week of time and wasted $600 of your mom’s money on a worthless survey. Ask her to call me so we can talk about three (3) things. Figuring out if we have an encroachment. Figuring out how we fix the encroachment by removing it or adjusting the lot lines. Figuring out who pays for the fix.”

The real estate agent never called me.

Cheri visited the subject parcel with her mom a couple of days later. She said the land surveyor had marked the approximate location of the north lot line on the fence using some strips of flagging (surveyor’s ribbon).  He didn’t set any missing property corners, he didn’t mark the building set-back lines, and he gave no indication of where the neighbors house was in relation to the north lot line.

A few days after that, Cheri called me to say her mom had decided not to purchase the parcel. There were other problems, it wasn’t just the encroachment on the north lot line.

Lessons

What lessons do we learn from this story? How can this story protect future purchasers of real estate?

Here are the most important lessons:

1. When purchasing real estate, have a land surveyor you trust review the vesting deed, land title report, survey land records, and tax assessor data. The surveyor may quickly identify a potential problem with the property that others miss.
2. Hire a real estate agent you know and trust, or one that is highly recommended to you. Pay the commission with a smile. A good real estate agent is worth that money.
3. Don’t let your real estate agent represent both sides of the transaction. Find a real estate agent that will protect your interests and work as your advocate.
4. Hire a land surveyor that will ask the right questions and help you solve problems. If you don’t, you can waste valuable time and money.

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Author’s Note

To protect privacy, the names of the people in this story have been changed, as have minor facts and details of the events that occurred.

he Real Estate Agent’s Failure

How did the real estate agent fail in this situation?

The real estate agent failed in three (3) main ways:

1. She failed to honesty represent her buyer and work to meet her legal duty to protect the buyer from harm.
2. She quickly dismissed a serious boundary surveying and land title problem when it was brought to her attention and tried to minimize its impact on the buyer.
3. She hired a land surveyor without explaining the questions she was trying to solve or the problem she needed to fix. This wasted the buyers time and money.

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The Land Surveyor’s Failure

How did the land surveyor fail in this situation?

The land surveyor also failed in three (3) important ways:

1. The land surveyor failed to ask the right questions. He didn’t understand why he was being hired, or what problem his ultimate client (the buyer of the parcel) needed to solve.
2. He failed to show important information on this survey. This included the distance from the encroaching fence to the lot line, the distance from the neighbors house to the lot line, and the relationship of the fence and house with the building setbacks on each side of the lot line.
3. He didn’t communicate possible fixes to his clients for the problem with the real estate. These fixes include removing the encroachment, performing a lot line adjustment, or granting a license or easement for the encroachment. He made the mistake many surveyors make by only discovering problems and not offering solutions.

I should mention the land surveyor wasn’t negligent. He didn’t do anything incorrect (as far as I could tell) when resolving the location of the subject parcel boundaries. He probably couldn’t be disciplined in this situation by the state licensing board. However, he was incompetent at minimum and harmful to the buyer at worst. I’d also argue spending a client’s money with no effort to actually solve their problem is unethical.

The surveyor caused more harm in this situation than good. His survey provided all parties involved (the seller, the buyer and the real estate agent) that something beneficial had been done to address the encroachment problem. This provided a false confidence. In reality, the only thing the surveyor had done was spend his clients time and money. He didn’t identify the encroachment problem, he didn’t describe it, and he didn’t help solve it.

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Sidebar: The Problem With Dual Agency Real Estate Agents

This article illustrates a common problem with dual agency real estate professionals (brokers or agents). Dual agency real estate professionals have a very difficult job. They must protect the interests of both buyer and seller without being affected by conflicts of interest. In my opinion this is almost impossible to do. In this case, the real estate agent was quick to downplay the impact of a very serious problem because it would interfere with her ability to close a deal for her seller. A real estate agent representing the buyer in this situation may have shown more concern about the problem.

I always recommend to my clients that they are represented by their own agent when buying real estate. This avoids completely the conflicts of interest and problems that come when a real estate agent is trying to uphold their duty to protect both sides of a real estate transaction.

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Sidebar: What The Boundary Survey Should Have Shown

The boundary survey prepared by the surveyor in this situation showed the following important elements:

1. The dimensions of the parcel.
2. The property corner monuments found during his survey.
3. The property corner monuments he searched for but didn’t find during his survey.

Despite this, the boundary survey was missing very important information. This included:

1. The distances from the encroaching fence to the north lot line.
2. The distances from the neighbor’s house to the north lot line.
3. The building set-back lines.
4. The location of the neighbor’s house in related to the building set-back lines.
5. The area of the subject parcel enclosed by the encroaching fence.
6. The area of the subject parcel, if any, under the footprint of the neighbor’s house.

This missing information was critical to identifying and solving the problems of encroachment. Without this information, the money and time spent on the survey was wasted and of no benefit.

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Sidebar: The City’s Failure

Sidebar: The City’s Failure

Before the neighbors large and expensive home was built, there was a failure on the part of the City of Sonora. As part of the building permit process, the City should have confirmed the home was being built inside both the lot lines and the building set-back lines. How was the home constructed without this check? There could be several causes. The most likely cause is a failure by the City to require a survey on the site plan for the home prepared by the architect. Another likely cause is a failure by the City to confirm the foundation for the house was being built far enough from the lot lines during constructions inspections it performed.