If you’re buying commercial real estate on Long Island – whether it’s an office building, retail space, warehouse, or vacant land for development – your lender is almost certainly going to require an ALTA survey before approving your loan. For most commercial transactions, it’s non-negotiable.
Banks require them because commercial real estate comes with risks that don’t show up in title searches, deed descriptions, or visual inspections of the property. An ALTA survey reveals those risks before the transaction closes, protecting both the lender’s investment and yours.
But what is an ALTA survey?
Why is it needed?
And what would happen if you didn’t get one?
Let’s talk about it.
What Makes ALTA Surveys Different From Other Surveys
ALTA stands for American Land Title Association, and ALTA surveys follow strict standards jointly established by ALTA and the National Society of Professional Surveyors (NSPS). These standards ensure that every ALTA survey, regardless of where it’s performed or who performs it, contains the same core information and meets the same accuracy requirements.
An ALTA survey is far more comprehensive than a standard boundary survey. It shows property boundaries, but it also shows:
- Location of all Buildings and Improvements
- Utility Lines
- Roads
- Fences
- Parking Areas
- Easements
- Encroachments
- Setback Compliance
- Access Points
- Any Other Physical Features That Affect the Property.
It also includes research into public records, deed descriptions, and title exceptions to verify that what’s on the ground matches what’s on paper.
This level of detail is exactly what lenders and title insurance companies need to evaluate risk in a commercial transaction. A simple boundary survey tells you where the property lines are. An ALTA survey tells you whether the buildings are actually within those lines, whether utility easements run under the parking lot, whether the property has legal access to a public road, and whether there are any encroachments from neighboring properties.
Why Lenders Require ALTA Surveys
Commercial lenders are in the business of managing risk. When a bank loans money for a commercial real estate purchase, they’re securing that loan with the property itself. If the borrower defaults, the bank needs to be able to take possession of the property and sell it to recover their investment.
But what if the property has problems that weren’t disclosed during the sale?
- What if the building encroaches onto an easement and the utility company has the right to remove it?
- What if the property doesn’t have legal vehicular access because the driveway crosses someone else’s land?
- What if the neighboring property owner has a legitimate claim to part of the land because of a boundary dispute?
These are the kinds of issues that can turn a valuable commercial property into an unsellable mess, and they’re exactly the kinds of issues that ALTA surveys are designed to uncover before the transaction closes.
Lenders require ALTA surveys to verify that the property is what the buyer thinks it is, that it complies with zoning regulations, that there are no encroachments or boundary disputes, and that the legal description matches the physical reality. Without this information, the lender can’t accurately assess the value or risk of the property, which means they can’t approve the loan.
In fact, most commercial lenders in the United States will not approve a loan without an ALTA survey. If you want financing for a commercial property purchase, you’re getting an ALTA survey.
How ALTA Surveys Protect Title Insurance Coverage
Title insurance protects buyers and lenders from defects in the property’s title – things like undisclosed liens, ownership disputes, or errors in public records. But standard title insurance policies include a “survey exception,” which excludes coverage for anything that would be revealed by an accurate survey.
This means that if you purchase title insurance without an ALTA survey, you’re not covered for encroachments, boundary disputes, easements not shown in public records, or any other physical issues with the property. Those risks fall on you.
An ALTA survey allows the title insurance company to remove the survey exception and issue what’s called “survey coverage.” This extends your title insurance protection to include physical issues with the property that the survey identifies and resolves.
For lenders, this is extremely important. They’re not going to accept a title insurance policy that excludes survey risks. They need comprehensive coverage that protects their interest in the property against all title defects, including those related to boundaries, encroachments, and easements.
Without an ALTA survey, you can’t get full title insurance coverage. Without full title insurance coverage, most lenders won’t approve your loan.
What ALTA Surveys Reveal That Other Surveys Don’t
ALTA surveys follow a detailed checklist of minimum requirements, and they can also include optional items from what’s called “Table A.” These optional items allow buyers and lenders to customize the survey to include additional information relevant to their specific transaction.
Standard ALTA surveys show property boundaries, buildings and structures, utilities, roads, fences, easements recorded in public records, and access to public streets. Optional Table A items can add information about zoning compliance, setback requirements, flood zones, square footage of buildings, parking space counts, underground utilities, and more.
This level of detail reveals issues that wouldn’t show up in a title search or basic boundary survey. For example, an ALTA survey might reveal that the building extends two feet over the rear property line, creating an encroachment onto the neighboring parcel. Or it might show that a utility easement runs directly under the loading dock, giving the utility company the right to dig up that area if they need to access their lines.
These are deal-breakers for many commercial transactions. If you discover an encroachment after closing, you could be forced to remove part of the building, negotiate an easement with the neighbor, or face a lawsuit. If you discover zoning violations after closing, you might not be able to use the property the way you intended.
ALTA surveys bring these issues to light during the due diligence period, when you still have the option to renegotiate the deal, require the seller to fix the problems, or walk away entirely.
What Happens If You Try to Skip the ALTA Survey
Some buyers look at the cost of an ALTA survey – which can range from a few thousand dollars for a small property to tens of thousands for a large or complex site – and wonder if they can skip it or substitute a cheaper survey type.
The short answer is no, not if you need financing. Lenders will not approve commercial loans without an ALTA survey. The ALTA survey is a standard requirement for commercial lending, and there’s no way around it.
If you’re paying cash and don’t need a loan, you technically have the option to skip the ALTA survey. But doing so is a massive risk.
Without an ALTA survey, you have no idea whether the property boundaries are accurate, whether the buildings are where they’re supposed to be, whether there are encroachments or easements affecting your use of the land, and so on.
You’re relying entirely on the seller’s representations and the information in public records, both of which can be incomplete or inaccurate.
If you close on the property without an ALTA survey and later discover a boundary dispute, an encroachment, or a zoning violation, you’re on your own. You can’t go back to the seller and demand they fix it. You can’t claim you weren’t aware of the problem. You also won’t have title insurance coverage for those issues because you didn’t remove the survey exception.
The cost of fixing these problems after closing – whether through litigation, negotiated easements, property line adjustments, or building modifications – will almost always exceed the cost of the ALTA survey you should have ordered in the first place.
The Process of Getting an ALTA Survey on Long Island
ALTA surveys take time, so buyers need to order them early in the due diligence period. The surveyor will need access to the property, copies of the title commitment and legal description, and information about which optional Table A items the buyer or lender wants included.
The surveyor will conduct field work to locate property boundaries, measure buildings and improvements, identify utilities and easements, and document everything visible on the property. They’ll also research public records, review the title commitment, and verify that the legal description matches the physical boundaries.
Once the field work and research are complete, the surveyor prepares the ALTA survey document, which includes a detailed map of the property showing all required and optional items, a certification to the buyer, seller, lender, and title company, and notation of any issues or discrepancies discovered during the survey process.
The timeline for completing an ALTA survey varies depending on the size and complexity of the property, but buyers should expect at least two to four weeks from the time the survey is ordered to the time the final document is delivered.
Working With a Licensed Land Surveyor for ALTA Surveys
ALTA surveys must be performed by a licensed land surveyor who understands the ALTA/NSPS standards and has experience with commercial real estate transactions. The surveyor needs to be thorough, accurate, and able to communicate effectively with all parties involved in the transaction.
Aerial Land Surveying provides ALTA surveys for commercial properties across Long Island. Using a combination of ground-based and aerial surveying technology, we can efficiently survey large properties and deliver accurate, comprehensive ALTA surveys that meet lender and title company requirements.
If you’re purchasing commercial real estate and need an ALTA survey, contact Aerial Land Surveying at (833) 787-8393 to discuss your project. We’ll work with you, your lender, and your title company to ensure the survey is completed on time and meets all requirements for your transaction.
Banks require ALTA surveys for good reason – they protect everyone involved in the transaction from costly surprises and legal problems. Trying to skip the ALTA survey to save money is a risk that’s simply not worth taking.