When dealing with real estate, the amount of information needed to make an informed decision abounds. One of the reports you need to help you determine the value of your potential property investment is a property report.
Property reports contain detailed information on everything from the boundaries of the property in question to structures existing on that property. The report comes with drawings and text providing every detail you could want when researching or purchasing real estate.
Defining the Real Property Report
Real property reports are legal documents prepared by land surveyors. It shows the boundary lines of the property plus the structures and improvements. The report tells you several things.
- The rights-of-way and encroachments near or at the boundary lines.
- Boundary issues with the municipality or neighbor.
- Accurate locations of structures from sheds and outbuildings to fences and other improvements.
Real property reports are considered “snapshots” of a piece of real estate at a moment in time. It details the surveyor's concerns and is used by the buyer, seller, lender, and municipality to represent accurate data for a property.
Property reports can be basic or detailed.
Typically, a basic property report contains ownership information, the last owner transfer data, and perhaps the previous market sale. Much of the data can be found in the public records at the county courthouse. However, it may not show the latest improvements and does not provide much detail.
The detailed property report contains everything in a basic report and much more. In addition to the ownership information, last transfer, and the previous market sale, a detailed report provides specific locations, details, site information, tax assessments, mortgage information, and area information, for a start.
To be of any help, the property report used in your transaction must be entirely up to date.
Everything In a Detailed Property Report
Expect to see a drawing of the property showing every type of boundary, encroachment, improvement, and more on your detailed property report.
- The legal description of the property and its address.
- Designation of any adjacent properties, roads, lanes, and other data.
- Dimensions and directions of all property lines.
- The location and a description of all improvements on the property, including dimensions and distances from the boundary line.
- Rights-of-way, easements, visible encroachments.
- A permit stamp, where applicable.
- Copyright and signed certification by the surveyor.
A detailed property report is a powerful addition to your stack of documentation, whether you are buying or selling.
The Benefits of a Property Report
The property report identifies problems requiring resolution before the property changes hands. Owners have an illustration of their property that includes the dimensions and placements of all structures and boundary lines.
Lenders expect to see a property report with verified survey information before approving a mortgage, refinance, or home equity loan. The report also simplifies property transactions.
Building permits and developers may require accurate and recently surveyed boundary information. The surveyor of record on the report can act as an expert witness in court if there are legal issues to be resolved. For most property deals, a property report reflecting the current state of the property fulfills regulatory compliance.
Who Uses Property Reports?
- Property buyers use the report to confirm boundaries, locations, and improvements. They also look for problems areas, like encroachments from a neighbor or the city. The report shows whether buildings and other structures are too close to property lines, and help with future planning.
- Property owners have a detailed document showing improvements within the property lines, and to find encroachments that may have been unknown previously. If they are improving the property, the report helps maintain compliance.
- Property sellers appreciate a document that not only confirms compliance, but that may also point out problems to fix before placing the property on the market. Also, the report provides legal protection.
- Mortgage lenders need to know the property conforms to municipal regulations and bylaws. They will ask that problems be resolved before registering a loan.
- Municipalities use property reports to determine compliance with fire codes, building codes, and bylaws during planning and development.
The Lifecycle of a Property Report
A property report, as noted above, shows the state of a piece of property at the time the report was created. Anything that happens to that property after the report is finalized will not be reflected.
For example, if the property owner adds a deck or garage, changes a driveway, or modifies fences and other features, the existing property report becomes outdated. Therefore, a real property report is only as accurate as of the last survey. If you own the property and have made no changes, your report is current.
Updating an existing property report is more cost-effective than requesting a completely new report. Ask the surveyor of record to help you decide whether the report can be updated or if a new survey is required.
Real Property Reports vs. Title Insurance
Title insurance isn’t a real substitute for a property report. Title insurance is for problems found after the sale. Wouldn’t you prefer to have the details before signing the contract?
A property report lets you know if the fence is over the property line or whether a permit was issued for that shed. Problems are revealed before the sale when you have more leverage to have them corrected. If you wait until the deal goes through, relying on title insurance, you bear the responsibility for any issues that come up.
Title insurance is an insurance policy. There is always the chance that it doesn’t cover whatever problem you have found. And if you are the seller, you need a property report anyway, so you can fill out an accurate deficiency report if needed.
Real property reports are part of the equation for every type of real estate or land deal. Residential, commercial, agricultural, and other property types all depend on property reports to provide accurate information about a property at the time of the survey.
A detailed document with the exact locations and dimensions of every structure, boundary line, and encroachment is a robust tool in the real estate toolbox and one that is often required by several interested parties to a land transaction.
