Typically, when a buyer secures a loan to purchase a property and/or requests the Owner’s Extended Coverage title insurance, the title company will order what is commonly called “the survey”. However, this instrument is an “Improvement Location Certificate” (ILC) and not a true boundary survey measuring property lines. An ILC is a scale drawing that documents the position of buildings, driveways, overhangs, outbuildings, fence lines, etc., about the legal limits of a plot of land. The lender or title company requires an ILC to ensure that any improvements are located on the lot and to note encroachments or other factors influencing the property’s value. ILCs will include the surveyor’s disclaimer that it should not be relied upon for fence lines. The ILC should NOT be construed as a boundary survey.
As a home buyer, you can request an ILC even if the title company or lender does not require it. This will give you confidence that all the improvements are actually located on the property.
The Colorado standard contract provides a date by which the home buyer and seller agree that the ILC needs to be completed. This deadline is usually after the title work has 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 the 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. However, ILCs for larger parcels, Metes and Bounds descriptions, and mountain properties can be expensive. It is always a good idea to investigate the possible expense of the ILC before agreeing on who will be paying for it.
The expense could run into thousands of dollars if a boundary survey is required. Having an ILC done for every real estate transaction is a good idea. Townhomes often have a small yard area, and it never hurts to see if you own that area within the lot or if it is on Homeowner’s Association property. However, ILCs are typically not ordered for a legal condominium, but a buyer could still order one if desired.
Be sure to consult your team of professionals to determine if an ILC or a boundary survey is appropriate in your case.
Duane graduated with a business degree and a major in real estate from the University of Colorado in 1978. He has been a Realtor® in Boulder since that time. He joined RE/MAX of Boulder in 1982 and has facilitated over 2,500 transactions over his career. Living the life of a Realtor and being immersed in real estate led to the inception of his book, Realtor for Life. For questions, e-mail duaneduggan@boulderco.com, call 303.441.5611 or visit www.BoulderPropertyNetwork.com.