My colleagues and I are often asked by clients and our partners in the corporate department if a survey is really necessary in the purchase of a business which owns valuable real estate. Since the Olshan real estate lawyers are used to clients who understand the values of a survey in commercial real estate transactions, the question sometimes leaves us speechless. My colleague Hyman Kindler came up with this checklist to help clients and colleagues navigate the issue.
We recommend obtaining a survey (or getting an update of any existing survey that the seller may have). A survey is a “picture” of the land owned by the target. By looking at this image you should be able to tell that you will in fact have control over the real estate that appears to be part of the business. A survey:
1. shows the boundary lines of the property;
2. shows any encroachments from your property onto adjoining properties;
3. shows any encroachments from adjoining properties onto your property;
4. shows where any recorded easements are located on your property;
5. ascertains whether the legal description in your deed can be used to actually locate the property on the ground;
6. ascertains the existence of any potential boundary line disputes (for example, does your property form a geometrically closed figure, or is there some “gap” from one portion of the record line of title to another portion of the record line of title); and
7. very importantly, permits your title insurer to insure your legal description, and to insure you for encroachments, easements and boundary line disputes not revealed by a current certified survey. Without a survey, even though you obtain title insurance, you are NOT insured against these matters.
PartnerTom represents owners, operators and developers in the acquisition, financing, development, ground leasing, and sale of significant properties. His experience includes office towers, commercial condominiums, industrial ...
PartnerHymie advises and represents purchasers and sellers looking to acquire, sell, develop or finance properties throughout the U.S. He focuses much of his practice on transactions involving large-scale commercial properties ...