A survey in commercial real estate is an essential part of the due diligence process that a buyer, seller, or developer must undertake. It is a graphical representation of the property, which includes information about its boundaries, improvements, easements, and encroachments. Regardless of the type of survey, it is a critical phase of any commercial real estate transaction.
This blog will explore why a survey is a big deal in commercial real estate.
1. Identifying Property Boundaries
One of the primary purposes of commercial surveys is to identify the property’s boundaries. This is crucial in commercial real estate transactions because it helps establish the exact size and dimensions of the land.
This information is necessary to determine the property’s value, negotiate the purchase price, and ensure the buyer gets what they are paying for. Additionally, a clear understanding of property boundaries can help prevent disputes with neighboring properties.
2. Uncovering Easements and Encroachments
Easements and encroachments are two vital factors that can impact the value and usability of commercial real estate. Commercial surveys can help uncover these hidden issues and ensure the buyer knows them before finalizing the transaction.
Easements are the rights a property owner grants another party to use their land for a specific purpose, such as utility lines, access roads, or drainage. Encroachments occur when a structure or improvement, like a fence or building, extends onto a neighboring property. Both easements and encroachments can affect the potential development and use of the property and, therefore, must be identified and addressed during the due diligence process.
3. Verifying Compliance with Local Regulations
A detailed commercial real estate survey can help verify whether the property complies with local zoning ordinances and building codes. This information is crucial for potential buyers or developers, as non-compliance could result in costly fines, penalties, or needing to remove or modify existing structures.
A survey can also identify any potential variances or special permits required for the property’s intended use, saving time and resources in the long run.
4. Assessing Environmental Concerns
Environmental issues can significantly impact the value and usability of commercial real estate. A survey can help identify ecological concerns like flood zones, wetlands, or contaminated soils.
This information can be crucial for potential buyers and developers, as it may impact the feasibility of their plans for the property. Moreover, being aware of environmental concerns can help avoid possible legal liabilities and future remediation costs.
5. Assisting in Financing and Title Insurance
Lenders and title insurance companies must survey before financing or issuing a title insurance policy for commercial real estate transactions. A survey helps lenders evaluate the property’s collateral value and assess any potential risks associated with the transaction.
Regarding title insurance, commercial surveys provide information on encumbrances, easements, or other issues that could impact the property’s title. By identifying these issues in advance, the buyer can address them with the seller, potentially saving time and money during the closing process.
6. Facilitating Site Development and Planning
A detailed survey is an indispensable tool for site development and planning in commercial real estate. The survey provides essential information about the property, such as topography, location of improvements, and access points, which is necessary for creating accurate site plans and engineering designs.
This information is critical for developers to determine the feasibility and costs associated with their intended use of the property. In addition, having a detailed survey can streamline the permitting process and help avoid costly delays and design changes during construction.
Conclusion
A survey in commercial real estate is a big deal for several reasons. As a buyer, seller, or developer in commercial real estate, you must include a detailed survey as part of your due diligence process to ensure that you are making an informed decision and protecting your investment.
Will’s Service Group has established itself as a reputable and reliable land surveying company with over a decade and more than five years of experience catering to the USA market. Our company’s founding mission to lower prices in the industry reflects our commitment to providing cost-effective solutions for our clients, ensuring transparency and fairness by eliminating hidden fees. If you need help with commercial surveys, do not hesitate to contact us for unparalleled service and value for your investment.
