Every policy contains a pre-printed exception on Schedule B for survey matters. In order to delete this exception, it is necessary to obtain a satisfactory survey, together with a surveyor's report certified to Old Republic Title. This requirement of obtaining a full survey and surveyor's report applies to all commercial property policies and to residential property owner's policies. For residential loan policies, this requirement has been modified as follows.
A survey exception is not acceptable on the secondary mortgage market, and therefore, most residential lenders will require that this exception be deleted. For most residential transactions, the cost of a full survey and an accompanying surveyor's report would be prohibitive. To overcome this problem, the title insurance industry accepts plans that are not full instrument surveys in order to delete the survey exception from a residential loan policy. These plans are called residential mortgagee surveys or plot plans.
If an owner is refinancing residential property for which it had previously obtained a plot plan, we may allow you to use a Residential Mortgage Survey Affidavit instead of requiring a new plot plan. To use this form in lieu of a plot plan, we require that the owner have obtained a previous plot plan within the past five years which disclosed no problems and that no construction have occurred since the date of the plot plan. There is an additional charge when this form is used in place of a plot plan. This extra-risk premium is remitted entirely to the company. Please contact the local office for the current fee due when using this form.
Sometimes it is impossible even to obtain a current plot plan. In rare instances and only upon approval by the local Minnesota Title office, we may authorize you to use the Residential Mortgage Survey Affidavit to delete Exception 2 from the residential loan policy.
If the survey or plot plan discloses any matters which adversely affect the premises, you may still be able to delete Exception 2, but a specific exception for the matters shown must be taken on the Schedule B of the policy. The exception should denote the adverse matter and refer to the plan. An example is as follows:
Possible sideline setback encroachment of deck along the easterly side of the property as shown on a plan entitled, “Survey of 21 Surrey Street, Marlboro” dated June 12, 1989, by M. Shiner, Surveyor.
On commercial policies, you should carefully review the survey and the surveyor's report for all matters which may adversely affect the property. An exception must be taken for all matters shown on the policy. This is referred to as a “read-in” of the survey. Such and exception would resemble the example set forth as follows:
The following matters as shown on a plan prepared by Steven Johnson entitled, “Plan of Land in Medfield, Massachusetts, owned by Fred Larkin” dated May 16, 1990, scale: 1” = 30' as follows:
a. Encroachment of Southwest corner of building onto public way.
b. Encroachment off the premises of storm drain along the Northerly border of premises.
c. Overhead electric wires.
Many times lenders will request affirmative insurance regarding these specific survey exceptions. If you receive such a request, please contact the local Old Republic office for approval before giving any affirmative insurance.