Acting on Assumptions? How an ALTA Survey Can Help

19 March, 2020

Without having all of the critical information about a site, developers potentially expose themselves to risk by acting on assumptions about how a piece of property can be developed.

Whether it is temptation to expedite due diligence, budget constraints, or a desire to postpone the title review search until the property closing is in sight, many developers do not review public records as part of their initial due diligence. As a result, they are unaware of potential easements, restrictions, and other encumbrances, which can significantly impact their vision for the project. This data is needed to make more informed decisions about whether a project is feasible, how much time and money it will take to develop, and ultimately whether to make a deal.

The ALTA survey – a package that includes review of public records – is one tool you can use to access critical information about your site’s value, restrictions, and development potential, early on in the process. Here’s how to use the ALTA survey to help you address risk in early phases and make better-informed decisions that can potentially save you time and money in the long run.

  1. 1. Order an ALTA survey at the start of due diligence. This will include boundary and optional topographic information, as well as a title search review conclusions. Easements, restrictions, and other encumbrances against the property are identified and are easy to understand.
  2. 2. Review findings with your civil engineer to identify key issues. Use restrictions and easements may have a significant impact on design, tenant options, and even the value of your property. A nearby quick service restaurant, for example, could have placed restrictions on the sale of french fries in the vicinity, or a gas line easement could cut through the middle of the site, limiting layout and access options.
  3. 3. Prior to closing, update the title review search to comply with lender obligations. To confirm that no new restrictions have been placed on the property or recent alterations have been made to the site, lenders typically require the ALTA survey to be dated within 30-90 days of closing. However, the cost to update an ALTA recently prepared by your surveyor is minimal compared to the capital that could be lost upon discovering a significant restriction on the property late in the game.

In today’s market, the returns are smaller, the risks are greater, and the decisions are stressful. The more you know about a piece of property up front, the better you can identify areas of risk, make more informed decisions, and strike better deals.

Contact our team to find out more about how investing in an ALTA survey up front may lead to better-informed decisions for your business.

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