Top 10 Changes to the minimum requirements for ALTA surveys
9. Aren’t ALTA surveys just for fee title property?
One common misconception about ALTA/NSPS Land Title Surveys (ALTA surveys) is that they are only necessary for the conveyance of real property in fee title. In many instances, this is the case. Assuming title insurance is being purchased and a lender is involved, ALTA surveys are commonly used as part of the due diligence process for common commercial real estate transactions (i.e. the buying and selling of office buildings, retail centers, industrial property, etc.) where the piece of real estate is being transferred in fee. That is, the complete ownership interest of a particular piece of real property is transferred as part of the sale.
One of the more subtle changes to the 2016 Minimum Standard Detail Requirements for ALTA/NSPS Land Title Surveys is the clarification as to what types of properties fall under the scope of an ALTA survey. In addition to fee interests commonly associated with ALTA surveys, Section 2 of the standards includes verbiage relating to the inclusion of other interests in real properties, such as marinas, campgrounds, trailer parks, easements, leased areas, and other non-fee simple interests. The verbiage is not necessarily new to the 2016 standards, other than the inclusion of easements, but it does beg the question as to what types of non-fee simple interests could possibly require an ALTA survey.
While most of my time at Westwood is spent supporting our efforts in the commercial real estate markets, from time to time, I am fortunate to have the opportunity to also provide survey support to our power generation teams on their wind and solar projects across the country. The commercial, wind, and solar markets are all vastly different, especially when it comes to the development process. One thing however usually remains the same – each project within these markets typically requires an ALTA survey as part of the due diligence process. There are always going to be unique issues or challenges to every ALTA survey, but whether it’s a survey of a 5-acre commercial development, or a wind farm that covers 100 sections of land, the process of conducting the ALTA survey is generally the same – just on a different scale. One thing that is almost always different though, is the type of interest (fee or otherwise) in the real property being surveyed.
As I mentioned above, many, if not most, commercial real estate transactions involving an ALTA survey are done in the context of transferring the fee title ownership of a piece of property from one entity to another. Wind farms, on the other hand, very rarely have an actual fee interest change hands as part of the development process. Sure, there might be a fee transfer of a small parcel of land for a new substation or something similar, but in general, the majority of interests in the lands affecting a wind farm development are typically obtained via leases and easements. This lack of fee interest doesn’t change the need for an ALTA survey though. Wind farms, in particular, cover huge expanses of land, affecting multiple owners and crossing various state, county, and city jurisdictions. And while wind developers are not taking an ownership interest in the properties that their projects impact, the importance of knowing such things as the lease boundaries, setbacks, existing easements, and underground utilities affecting the project remains the same. No different than a commercial transaction involving a fee interest, the knowledge of potential issues related to the interests in non-fee property such as leases or easements goes a long way towards mitigating risk and project pitfalls.
Coming up next - #8: Isn’t it enough to just show the easement lines?
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