We recently talked to an investor who purchased a large multifamily building in Reading. This investor was based in New Jersey, but like many folks from Jersey, was seeking affordability in PA markets.
This investor charged through due diligence and was prepared to close with a local lender they knew in the NJ market. However, that lender had put an ALTA survey requirement in as a condition of the loan.
The investor was purchasing direct and wasn’t aware this could be a requirement. In PA, an ALTA isn’t always required by title companies, so closing approached without one already in hand.
Thankfully, they were able to get an extension of time from the seller and order a rush ALTA survey, which arrived just in time to meet their closing date.
So why do some states require an ALTA, what is it, and why do investors need it?
While not required in every jurisdiction, ALTA surveys are often demanded in commercial real estate deals, especially where title insurance or lenders require them.
What Is an ALTA Survey?
An ALTA survey is a detailed land survey developed according to joint standards set by the American Land Title Association (ALTA) and the National Society of Professional Surveyors (NSPS). It provides a comprehensive map of a property’s boundaries, improvements, easements, rights-of-way, access points, zoning classifications, flood zones, and other critical features that may affect ownership and use.
Unlike a simple boundary survey or plat, an ALTA survey is conducted alongside a title commitment and includes Schedule B-II exceptions — the encumbrances and limitations listed in the title work. This integration helps uncover conflicts between recorded documents and the actual physical use of the property.
Key Components of an ALTA Survey
Some of the most valuable elements of an ALTA survey include:
- Boundary lines and corners as verified by a licensed land surveyor
- Recorded easements and encroachments, such as utility lines or shared driveways
- Setbacks, building footprints, and access points
- Legal description verification, matching title and deed language
- Public and private rights-of-way, like alleys, roads, or paths crossing the property
- Improvements and utilities, visible or known, above or below ground
- Flood zone classification per FEMA maps
- Optional Table A items, which can include zoning designations, parking counts, topography, and more, depending on what the buyer, lender, or title company requests
Why Lenders and Title Companies Often Require ALTA Surveys
Lenders, especially national or institutional ones, often require an ALTA survey before closing on a commercial real estate loan, because it identifies conditions that could impair the property’s value or legal use that may not be found in public records alone.
Title insurers also use the survey to determine whether they can offer survey-related endorsements, which provide coverage for issues like encroachments, unrecorded easements, or access problems. Without an ALTA survey, these endorsements are generally unavailable.
Why Some States Require ALTA Surveys and Others Don’t
The need for an ALTA survey isn’t uniformly mandated by law across the U.S. Rather, it’s driven by customary practices, risk tolerance, lender policy, and title insurer requirements, all of which vary by state:
- Pennsylvania: ALTA surveys aren’t a blanket legal requirement, since state regulations focus primarily on boundary surveys and Pennsylvania’s own property laws.
- Maryland: often required by lenders and title companies to confirm site conditions are accurate and insurable.
- Texas and Florida: frequently required due to complex legal descriptions, older subdivisions, or historical issues with encroachments.
- New York: local legal custom relies more heavily on attorney title opinions, and ALTA surveys are less frequently ordered unless the lender requires one.
- California: surveys may be waived on urban parcels with no known encroachments and clean legal descriptions, but rural and hillside properties often need detailed survey work.
In short, there’s no uniform legal mandate, but practical and legal realities on the ground often dictate the need for an ALTA survey, especially in complex or high-value transactions.
5 Benefits to Using an ALTA Survey
- Uniform standard: ALTA standards are a uniform, nationwide survey standard, making it easy for a title company to review the survey and write title insurance on the property.
- Encroachments and easements shown: an encroachment happens when a property owner builds on or over a neighbor’s land. If described sufficiently, an ALTA survey should show potential encroachments and plot recorded easements on the survey drawing.
- ALTA Table A items: the standards include a list of optional items that may be ordered alongside the original survey, potentially saving money since the work is done at the same time as the boundary survey.
- Title exceptions: exceptions not covered by the title policy leave the owner open to liability. Some of these deal with matters that an accurate survey can uncover, like encroachments — completing an ALTA survey allows the title insurer to remove those exceptions.
- Consistent scope of work: usually the hardest part of any contract is defining the scope of work and how it will be completed. ALTA survey standards provide a consistent scope of work that’s been used since 1988 and is regularly reviewed and updated to reflect the latest technology and legal issues.
Conclusion
An ALTA survey is a helpful, consistent tool for commercial real estate investors, making sure all conditions of a property are known. Avoiding a ‘surprise’ easement or issue down the road is an important part of mitigating risk in a real estate transaction. While not required in every state, it can be a useful tool for consistency across your portfolio.
Many investors we work with understand that a balanced approach to real estate blends confident acquisition with careful risk review. We help investors take a consistent approach to build long-term wealth for their families. If you’re looking to grow your investments, contact us to discuss your next steps.
