There’s nothing like buying a home and finding out on the day you move in your garage is encroaching onto your neighbor’s property! It doesn’t happen very often, but it does happen, especially in older neighborhoods where a previous homeowner put up a garage or shed without a survey or a permit.
Typically, when a homebuyer gets a loan to purchase a property, and/or when the buyer is requesting Owner’s Extended Coverage title insurance, the title company will order what is commonly called “the survey”. However, this instrument is actually an “Improvement Location Certificate” (ILC), and not an actual “Boundary Survey.” An ILC is a scale drawing that documents the position of buildings, driveways, overhangs, outbuildings, fence lines, etc. in relation to the legal limits of a plot of land. The lender or title company requires an ILC in order to make sure that the improvements are located on the lot and to note any encroachments or other factors that would influence the value of the property. ILCs will include the disclaimer by the surveyor that it should not be relied upon for fence lines. The ILC should not be construed as a boundary survey.
As a homebuyer, you can request an ILC, even if the title company or lender is not requiring it. It will give you the confidence that all the improvements are actually on the property.
The Colorado standard contract provides a date by which the buyer and seller agree that the ILC needs to be completed. This deadline is usually after the title work would have been received since the surveyor needs the title work to complete an accurate document. It is recommended to go ahead and order the ILC through your title company, in conjunction with the lender for the transaction, at the same time the appraisal is ordered. The contract negotiations will dictate who pays for the ILC and a maximum cost for the ILC. The contract will also specify a date to resolve any issues, if there are any.
The standard “in town” ILC typically has a reasonable expense associated with it. ILCs for larger parcels, metes and bounds descriptions, and mountain properties can be very expensive. It is always a good idea to investigate the possible expense of the ILC before agreeing on who will be paying for it. If a boundary survey is required, the expense could run into thousands of dollars. It is a good idea to have an ILC done for every real estate transaction. Townhomes often have a small yard area and it never hurts to see if you actually own that area within the lot, or if it is on Homeowner’s Association(HOA) property. However, ILCs are typically not ordered for a legal condominium, but a buyer could still get one if desired.
Be sure to consult your team of professionals to determine if an ILC is appropriate in your case.
About Duane Duggan: Duane Duggan has been a Realtor® for RE/MAX of Boulder in Colorado since 1982 and has facilitated over 2,500 transactions over his career, the vast majority from repeat and referred clients. He has been awarded two of the highest honors bestowed by RE/MAX International: the Lifetime Achievement Award and the Circle of Legends Award. Living the life of a Realtor and being immersed in real estate led to the inception of his book, REALTOR® for Life. Also see his video podcasts about real estate topics on RE/MAX of Boulder’s YouTube channel.
For questions, email Duane at DuaneDuggan@BoulderCo.com or call 303-441-5611