CODES FOR TITLE INSURERS – Fastmereja

CODES FOR TITLE INSURERS

Codes of practice for the land surveying profession are common. Most state surveyor’s associations have promulgated surveying standards; some states have enacted practice standards as state law or adapted them as regulations through their licensing and registration boards. There are national sets of standards, for example, the most well-known and widely-used being the Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys, which has been in existence since 1962 in one form or another. Yet except in those states with statutory standards, few surveyors admit on the face of their survey maps that the survey was made in compliance with any particular code or any minimum standards at all. In some areas of the country, there is considerable resistance to and occasionally outright refusal of –a request to certify a survey to some specified code of practice or to provide any kind of certification at all.

Such a response is not only puzzling, but is certain to raise doubts in the minds of clients and their attorneys about the scope and quality of the survey rendered. For the most part, laymen and lawyers do not know what a surveyor does (or should do) in order to deliver the finished map of survey. Nor should they be required to find out. The land surveyor is, in most sates, a licensed professional and clients and attorneys should be able to rely on the surveyor’s exercise of his or her professional judgment. Although a surveyor may feel it is only necessary to “certify” his work, secure in the knowledge of what constitutes the “standard of care” of his fellow professionals, his clients do not share this security of knowledge. As a result, attorneys and their clients should insist on their surveys being done in accordance with a particular code, and that the surveyor certify his or her work in accordance with an appropriate set of standards that they can deliver to their client together with the finished map.

The use of an appropriate code of practice will inform the client of the scope of the surveyor’s work, and what the client can expect to find and not find in the survey. An owner of property should not rely on a survey to indicate the presence or location of interior cemeteries if the survey clearly indicates that it was done in accordance with the 1997 ALTA/ACSM standards. Conversely, the selection of a code by the client clearly indicates to the surveyor the scope of work that the client expects. A request for an ALTA Survey under the current code should discourage the surveyor from furnishing a “mortgage map” drawn from the front seat of his car.

Specifying a set of standards also defines the standard of care to which the work should be done. This can protect the surveyor who was hired to do a pure topographical survey form a client who later builds a twenty- story building in reliance on lot lines that were shown for reference purposes only. Likewise, this can protect the client who requested a boundary survey and assurance of contiguity from the surveyor’s later claim that the “custom” in the area was not to research the descriptions of adjoining properties.
Codes of practice also serve as evidence of the level of care that the profession itself considers to be the minimum performance expected of a surveyor. They provide attorneys with the opportunity to look at the surveying profession’s own requirements for the scope and quality of a survey. Even those surveyors who refuse to comply with the code common in their state or area are likely to be judged by its standards. Of course, if the code itself is a poor one-and many of them are-there is a risk that the standard of care will be too low. In fact, this has happened in some areas where “mortgage maps” and “tape surveys” have become the standard for title surveys to the debasement of the profession as a whole.

There are two major classifications of practice codes, one based on the promulgating authority and the other on subject matter. Codes can be statutory, such as Ohio’s standards for boundary surveys (Minimum Standards for Boundary Surveys in the State of Ohio, Ohio Admin. Code Chapter 4733-37); regulatory, such as Connecticut’s Code of Practices for Standards of Accuracy of Surveys and Maps (Rules and Regulations of State Board of Registration for Profession Engineers and Land Surveyors, & 20-300-15); or established by private associations, such as the ALTA/ACSM standards. With respect to subject matter, codes can be generic and apply to all surveys, such as Florida’s regulatory requirements (Board of Professional Land surveyors, Minimum Technical Standards, Department of Professional Regulation Vol. 10 529-532); specific to one type of survey, such as Indian’s Minimum Standard Detail Requirements For Land Title Surveys; or “comprehensive,” in which a single code addresses the particular nuances of each type of survey, such as the Ethical, procedural and Technical Standards for the practice of Land Surveying in the Common wealth of Massachusetts.
From another perspective, the existing codes of practice exemplify two distinct, but not inconsistent approaches. One could be called the “technical” approach. A good example is that of the Connecticut Code. Most of it deals with the minutiae of tape standards, the number of repetitions of angles, closure of field traverses, etc. The other is a more “conceptual” approach, with the emphasis on “what to measure” rather than “how to measure.” Florida’s statutory directives require the surveyor to determine the position of the boundary lines based on the record lines and to indicate all overlaps and erroneously located lines. There is no pure example of either a “technical” or “conceptual” code, but these approaches are found in very different proportions. For example, Connecticut’s is primarily technical, Indiana’s title survey code is primarily conceptual, and the ALTA/ACSM Code is some where in between. None of these approaches is good or bad in and of itself; however, in light of the purposes for which codes of practice exist, a “conceptual” code is preferable. The “technical” code is of minimal use to the end user, whether it be an attorney, a title insurer, a developer, or a property owner. The client does not know what an error ellipse is – let alone how to interpret one-but the client does know that he wants the surveyor’s professional opinion of the location of his property lines. In addition, surveying is a growing and constantly changing profession. No one is served by being locked into an out- dated technology of measurement by a “technical code.” The increased use of one second direction Theodolite makes regressive those technical standards requiring 6 repletion, 3 direct and 3 reverse, for all angles. The use of electronic distance-measuring equipment is discouraged by a code of practice that requires the use of an invar tape; similarly, requirements of close traverses or triangulation discourage innovation such as radial surveying or the use of the global positioning system.
The ultimate user of the survey has no way to judge the appropriateness of any of these techniques. In the majority of stets, surveyors are licensed professionals who must have extensive theoretical and practical experience and knowledge of the methods of measurement and determination of boundary lines. Surveyors are recognized as expert witnesses with respect to property lines and are regarded as having specific expertise separate from and beyond that of the civil engineer. The status of a licensed professional should assure competence in the technique of measurement. To be of greatest use, a code of practice should be a statement of what is to be done by the surveyor. It should inform the client of what he can expect from the surveyor, and the surveyor of what the client expects from him.

The ALTA/ACSM code strikes a balance between the “technical” and “conceptual” approaches to codes of practice. Because it is a title survey code, however, it cannot serve as a model for the profession as a whole, nor can it be used without substantial modifications for an owner developer.

Except for the statutory standards, most codes of practice were initially promulgated by the title insurance industry, either nationally or by local state title insurance associations and then adopted by various surveying societies. The title insurance industry is a significant end-user of the surveyor’s expertise and has a particular interest in getting surveys on which title insurers can rely. The title insurer’s interest is a limited one, however, and a title survey that is adequate from an insurer’s point of view is not necessarily enough for an owner or developer. Unfortunately, some of the surveying profession’s attempts to codify its practice appear to have been little more than reactions to a fear that the title industry would unsurp the role of surveyors’ associations. ACSM had promulgated “Technical Standards for Property Surveys” in 1946, yet in 1962 it adopted as its own the standards for title surveys of the then Americaln Totle Asociation. Rather than being adapted to meet the needs of the title insurance industry, the 1946 Technical Standards became a footnote in the ALTA code: they were “recommended.” Even this lip service to the ACSM Property survey standards has been eliminated from the most recent ALTA/ ACSM code. As a result, the only widely recognized surveying code on a nationwide level is a title survey code, an even that is not a product generated by ACSM, but a joint enterprise with ALTA. Even worse, some state associations, such as the New York State Association of Professional Land Surveyors, simply adopted the local title association code for title surveys with minor amendments and called it a “Code of Practice for Land Surveys.” To he unsuspecting, it is a generic code; in reality, it is for title insurance purposes only.

Title insurance is a risk averse industry. A title policy excepts from coverage, among other things, all title defects that the company has discovered of record, all defects of which the insured may have had knowledge and failed to disclose to the insurer or which result from the acts of the insured, and in most policies (particularly owner’s policies), “any state of facts an accurate survey may show.” The sole purpose of a title survey is to allow the title insurer to remove this so-called “survey exception” from the policy. The survey exception is usually not removed, however, but replaced with a “survey reading” that excepts from insurance coverage the specific defects that the survey reveals. If the survey shows that the lot does not close, that there are overlaps or gores with adjoining properties, or that there are encroachments of improvements or easements, these defects are simply not insured against. In addition, there are many things that an accurate survey would show that the title policy does not and cannot insure against, because they are not deemed to be title defects (e.g., Zoning compliance, setback requirements, utilities).

The decision to eliminate or limit the survey exception is both a legal and economic one. On a lender’s policy, the exception is very likely to be taken out because most sophisticated mortgage lenders and their attorneys insist that it be taken out. On owner’s policies it often costs more in premiums to have the survey exception removed, and many attorneys do not realize its significance. In the event of a loss due to a boundary line misallocation or encroachment, the title company’s liability can be limited to the face amount of the policy, which may be far below the market value of the property “lost.” The owner faces the loss of possession, costs to remove encroachments, etc., which may far exceed the insurance coverage. Not only are the title insurer’s survey concerns different from a property owner’s, but its risk of loss can also be substantially lower.

This can be seen in the wide range of acceptable way to remove the survey exception: visual “inspections” by title company employees, the notorious “mortgage map,” the “location service” provided by Chicago Titel (until the execution of a consent decree in April 1986 with the Professional Land Surveyors of Ohio), or affidavits from the current owners that they have not had a boundary dispute with any of their neighbors within the statutory period for adverse possession. Each of these will remove or limit the survey inspection, but none of them could be relied upon in order to erect a fence along a property line. It is from this perspective that the ALTA/ACSM standards are lacking for the owner/ developer, and fail to serve the legal profession as a model standard of care by which surveys should be judged.

One of the problems with a title survey code as a “model” code is that it is both over and under inclusive. Suppose that a surveyor is hired specifically to locate and stake a single property line for a fence. If he certifies that his work is in accordance with the ALTa/ACSM code, will he be liable if he does not note the existence of a cemetery on the property that he noticed while running the line? In this case, the code imposes additional burdens and costs that are unnecessary for the project. In contrast, if the legal description of the property does not mathematically close, the surveyor can still stake the line and certify compliance with the ALTA/ACSM code, even if it is later determined that the line staked contained the error which prevented closure. The risk of liability for the surveyor is increased at the same time that the ability of the client to rely on the survey is decreased.

Title surveys, construction surveys, boundary surveys, building permit surveys, taking maps, subdivision surveys, and all other types of surveys in which the locations of improvements or new property lines are to be related to existing boundary lines require, as a fundamental datum, the location on the ground of those boundary lines. An owner expects, at a minimum, that the survey map he has ordered will indicate, to the best of the surveyor’s ability, the location, dimensions, and extent of his property. This requires the surveyor to research and analyze the deed for the client’s property, the record description of all adjoining properties (even in the so-called “metes and bounds” states, no property stands alone, but only exists in relation to the surrounding parcels), all available maps (whether for subdivisions or highway rights-of-ay), field or unfilled, and certificates of title. It requires the physical locationof all evidence in the field, whether monuments, stakes, physical improvements, or lines of possession or occupation. The recrd data must be reconciled both with itself and with the phsycial evidence. Overlaps and gores must be identified, errors of closure discovered, misalignments of record and occupied lines delineated. Out of this mass of often confusing and inconsistent data, the survey or must establish, in his professional judgment (and not as an advocate of his client), the most probable location of the boundary lines of the property in question.

Due to both the nature of a title company’s role as an abstracter and its specific requirements for a “title” survey, an ALTA/ACSM survey need not involve the above determinations. The survey or is under no duty to search the record or even obtain a description of the client’s property: he is only bound to work from the information provided by the client. In most cases, an owner has neither the expertise nor the ability to ferret out all the record information needed. This is usually one of the reasons the owner has ordered a survey in the first place. The ALTA/ACSM code does not require the research of adjoining property descriptions. There is also no requirement to determine the boundary lines or reconcile overlaps, gores, discrepancies between occupied and record lines, or errors of closure; it is sufficient simply to indicate their existence. Even if the description of the client’s property fails to close, the code does not require that the surveyor indicate the most likely source of the error and provide a corrected description simply noting the failure to close is sufficient.

The range of potential uses for surveys is immense, and each has specific requirements beyond the needs of a title insurer. The zoning classification of the property, including use and setback, height and bulk restrictions, the location of all existing utilities, the staking of the actual corners of the property or of improvements to be built, topographical information and elevations, parking areas, location in a federally designated flood hazard zone, state plane coordinates for property corners, and other items may be relevant for the needs of a particular client. The cachet of an ALTA survey should not blind the owner, his attorney, or the surveyor to the need for a careful consideration of the purpose of he survey and the requirements that must be met. The list of additional items attached to the ALTA/ACSM code is an attempt to expand the utility of the code to cover surveys for other than title insurance purposes, but it is ultimately only a stop-gap.

The 1997 ALTA/ACSM Code of practice is an adequate response to the needs of the title insurance industry. In the absence of a blanket code that clearly defines the basic scope of the surveyor’s expertise and his duties with respect to property surveys in general, it is necessary for attorneys to be well informed about the scope of the survey work needed by his client, and the provisions of any code of practice to which a survey is done. Most importantly, there should be clear communication with the surveyor about the needs of the client. The survey should not be relegated to the role of an adjunct of a title policy. Lawyers and clients cannot rely on he title insurance industry, with its specific needs and cost benefit philosophy, to define the scope and quality of surveys.

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