Does Title Insurance eliminate the need for a Land Survey?

Submitted by Jasmina on Mon, 2006-10-16 23:23.

Bob AaronIn this BAR-eX Current Awareness Article Bob Aaron Toronto Star real estate law columnist suggests to make land survey part of any deal and not to view title insurance as a replacement for the survey. He tells the story that has some valuable lessons for every purchaser of a freehold property:

  • Every agreement of purchase and sale should have attached to it a legible copy of an existing survey. If it's not available, the listing agent hasn't done his or her job.
  • In 2003, the Real Estate Council of Ontario (RECO) heard a complaint against an agent who failed to make a purchase agreement conditional on review and approval of a survey. The council ruled that the agent had breached RECO's code of ethics. I suggest that a clause allowing review of a survey should be inserted in every offer to purchase.
  • If the seller says that no survey exists, and can produce her lawyer's reporting letter as proof, the purchaser should insist that a new survey be provided by the seller before closing.
  • If the seller can't produce a survey, it could be an indication that he or she is an imposter. Deeds and driver's licences can be forged, but I've never heard of a counterfeit survey, or a fraudster ordering a new one.
  • When the real estate agent says that title insurance is a substitute for a survey, an appropriate response is that the statement is simply incorrect. Title insurance is just that — insurance. It's a backup position which can underwrite any resulting losses, but it is not a substitute for the information a survey reveals. Nor is it a substitute for the warnings a survey can provide that something is wrong with the title, such as an encroaching structure or fence, or the fact that a neighbour owns part of the land that was supposedly part of the transaction.