Buyers : Should You Order a Survey or an ILC? Real Estate Advice for Home Buyers Colorado - REMAX Alliance - Anthony Rael

The term 'survey' for documents requested as part of a real estate transaction is widely unknown and many times overlooked. In many cases, especially for properties located in cities and towns, full surveys that carry surveyor liability and warranties of accuracy are not typically required.

Lender Assurance of Boundaries
During the title insurance underwriting process, the buyer's mortgage company and title insurer will want some assurance that the property you are purchasing is actually located on the plot identified in the purchase contract. The mortgage company also wants to know that there are no significant encroachments of other adjacent property or beyond the deed lines. Easements of public record are shown graphically, which may delineate areas of land that belong to the property owner, but in which other parties (such as utility companies) may have limited rights. These must be made know because they could adversely affect the title.

Improvement Location Certificates
Information needed to provide the assurance can be compiled in an Improvement Location Certificate (ILC) for significantly less than a survey and in typically a shorter period of time. ILCs are certified by licensed surveyors, but they are not surveys. The purpose of an ILC is to provide the location of the structures and improvements in relation to property boundaries as noted on the deed. It is important to note that the measurements and boundaries in ILCs are estimates and not exact numbers and language in the ILC will clearly state this fact. If your mortgage lender has a question about the ILC or has concerns that an encroachment appears to exist, they may request will order a full survey and the buyer will be responsible for paying the cost.

ILCs address items such as:

Encroachments:
The ILC confirms the location of buildings (ADU) and structures (Sheds & Covered Patios) and notes any that may potentially cross boundary lines or easements.
Legal description:
The ILC confirms the property's legal description is accurate. This is absolutely critical for title accuracy. The certificate also confirms that the property address is correct.
Up-to-date survey:
The ILC confirms that the survey is current and accurate. Mortgage lenders may ask for a copy of the survey to close a new construction home and it's very typical for a copy to be included by the builder and a copy provided to you at closing.
Easements:
The ILC confirms that all easements are documented and accurate. For example, fences are a are common concern for mortgage underwriters because fences are oftentimes not installed within or on the property line - in which case a survey may be requested/needed.

Survey vs ILC
An ILC will state that they are not to be used by the property owner in any way and that they are only for the use of the title insurer and mortgage company. When using the term "survey," it's best that you understand exactly what you're getting. You need to know that an ILC is not usable for purposes that require a survey (like confirming property boundaries) and the cost between the two is significant: an ILC can run $800-1200, while a full-blown survey will typically run two to three times this or more depending on where the property is located.

Important note: Homeowners sometimes mistakenly think an ILC provides them with information to build structures, such as sheds or fences on their property or along shared property lines. When purchasing a home, Buyers should be informed that an ILC is not accurate for making this determination and they should order a full survey before undertaking any property improvement projects. Only a survey conducted by licensed surveyor can establish the actual property or boundary lines. If you are considering purchasing land without any existing structures, your real estate agent should advise you to order full survey before undertaking any construction projects. It's also worth mentioning that ILCs and surveys are typically not required for condo & townhome properties located within a Common Interest Community. When in doubt, consult with your agent or a real estate attorney.

Looking for more helpful advice, visit my Buyer's Toolbox. If you have any questions, please contact RE/MAX Alliance real estate broker Anthony Rael at (303) 520-3179

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