The American Land Title Association (“ALTA”) and the National Society of Professional Surveyors (“NSPS”) have historically agreed upon certain standards relating to title to real estate and the components of surveys with respect to the boundaries of lots. It is of the upmost importance that all of the parties to a real estate transaction understand the new 2021 revisions made to the “Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys” document (collectively, the “Updated ALTA/NSPS Minimum Standards”). The Updated ALTA/NSPS Minimum Standards outline the new industry standards that will typically be followed and complied with by surveyors, title insurers, attorneys, purchasers, and lenders in connection with all future title and survey reviews that are performed by such persons. Specifically, on February 23, 2021, ALTA/NSPS adopted the Updated ALTA/NSPS Minimum Standards that had already been previously mutually agreed upon by both the American Land Title Association (“ALTA”) and the National Society of Professional Surveyors (“NSPS”) prior to such adoption date.
According to ALTA’s website, ALTA considers itself to be “the voice of the abstract and title insurance industry”. In contrast, NSPS represents all of the surveyors throughout the United States. As the Updated ALTA/NSPS Minimum Standards will be updated and revised every five (5) years, it is important for all of the real estate professionals referenced above to regularly keep track of and stay up-to-date with the latest edition of the Updated ALTA/NSPS Minimum Standards in order to make sure that one’s real estate transaction proceeds as smoothly as possible to closing.
Below are primary changes contained within the Updated ALTA/NSPS Minimum Standards:
Gutierrez de Martines v. Lamagno
The committee’s first item on the agenda was to clarify the definition of the word “shall” in the Updated ALTA/NSPS Minimum Standards. In the U.S. Supreme Court case Gutierrez de Martines v. Lamagno, the U.S. Supreme Court found that the word “shall” actually means “may”. In the past, the ALTA standards frequently used the word shall with regard to certain items that had to be reflected on the survey to meet the minimum ALTA requirements. With this new decision, the committee then reviewed each use of the words “must” and “shall” and determined on which one of the words should be in the Updated ALTA/NSPS Minimum Standards. Therefore, the use of the word “shall” in the Updated ALTA/NSPS Minimum Standards indicates an optional provision, whereas the word “must” indicates that it is mandatory. While this change may seem minor, it will impact what items have to be included in the survey and which may be included to meet the minimum standard requirements. This small matter could impact the timing and cost of the survey, which can be significant.
Mobile Home Parks and Mineral Interests
The Updated ALTA/NSPS Minimum Standards add mobile home parks and mineral interests to the list of types of property interests to be surveyed; and, therefore, if the property being surveyed has a mobile home park or mineral right interests, these elements must be surveyed, handled properly in accordance with the terms set forth in the Updated ALTA/NSPS Minimum Standards, and appropriately marked on the survey. Again, this could have consequences in terms of the length of time it takes to have a survey done and the potential cost for such survey. With the real estate market being so hot right now, additional costs and time constraints can play a significant role in pending transactions.
Real estate professionals and surveyors often talk about “Table A” in conjunction with surveys. Table A is a detailed list of the minimum standard detail requirements for ALTA/NSPS Land Title Surveys. The real estate professional or party to a real estate transaction will fill out Table A for the surveyor to outline what is to be included in the survey. All of the items in Table A are able to be negotiated between a client and the client’s surveyor. Depending on the items selected, the cost of the survey and the length of time it takes to conduct the survey will vary. Further, lenders will often have their own requirements as to which items they require to be selected on Table A. Too often, a survey is ordered, and Table A is filled out quickly and in the interest of avoiding extra costs. While this might save money in the short term, it can lead to increased costs later on if the Lender on the real estate transaction requires additional items beyond those already ordered.
With the recent changes to the standards, item 1 of Table A – which provides for the showing of all monuments placed (or referenced monuments or witnesses to the corner) – has been modified to provide that the surveyor has to show enough physical monuments on the survey so that the survey can be redrawn. Item 4 of Table A, which requests that the survey show the flood zone classification and flood areas to be shown, has been modified to provide that if there are wetlands on a property, the area of the wetlands must be defined on the survey. Items 6a and 6b of Table A, which request that zoning information such as zoning classification, setback requirements, etc. be reported, have been modified to provide that zoning information specific to the surveyed property must be provided to the surveyor.
Item 10b of Table A which provided that the surveyor was to determine if certain walls are “plumb” has been removed in its entirety. Item 11 of Table A has been simplified in order to help surveyors come to a better understanding with clients as to what exactly must be shown on the survey pertaining to underground utilities. The location of utilities is a significant issue on surveys, as they can impact the ability to develop the property and interfere with the use of the property.
Finally, item 19 of Table A which requests that the surveyor plot any offsite, appurtenant easements, etc. has been revised to provide that if such Item 19 of Table A is selected, an offsite easement will be surveyed by the surveyor as if it were a non-monumented fee parcel. Off-site easements, in particular, can be very important. For example, properties often have an easement over abutting land for access, utilities, etc. and, too often, real estate professionals and parties to a real estate transaction do not obtain all the information about such offsite easements, which could frustrate the contemplated intended use and development of the property.
The new revisions to the Updated ALTA/NSPS Minimum Standards require that a surveyor mark all existing utility poles that are within ten feet (10’) of the surveyed property. This revision includes all encroaching utility pole cross members or overhangs. It is now a requirement that the surveyor include sources for their marking, and if the source is unknown then the surveyor must make a note of such fact.
Ultimately, if you are planning on entering into a real estate transaction and there is any chance that you may need to obtain a survey, it is important that you become familiar with the Updated ALTA/NSPS Minimum Standards. The Updated ALTA/NSPS Minimum Standards are now fully effective for use; and, therefore, we recommend that you consult with an attorney to help you understand what you should be requesting when you order an ALTA survey and consider the transaction as a whole, including what requirements a lender may require as to the survey. Planning in advance and seeking professional guidance may save time and money.
This alert should not be construed as legal advice or a legal opinion on any specific facts or circumstances. This alert is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. The contents are intended for general informational purposes only, and you are urged to consult your attorney concerning any particular situation and any specific legal question you may have. We are working diligently to remain well informed and up to date on information and advisements as they become available. As such, please reach out to us if you need help addressing any of the issues discussed in this alert, or any other issues or concerns you may have relating to your business. We are ready to help guide you through these challenging times.