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posted: 12/31/2010 12:01 AM

Law talk: Bank refuses to provide survey; what should buyer do now?

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Q. My husband and I closed on our first home last week. At the closing, the seller's attorney failed to provide a survey although it was required under our contract. The attorney said that this was a bank sale and the bank never provides a survey.

Our attorney told us we had the right to walk away and not close, but that was not an option for numerous reasons. We were also told we could not get certain coverage under out title policy because there was no survey.

We have the option of purchasing a survey on our own, but are wondering if it is really necessary. Our attorney does not appear to feel strongly about it one way or another. Please tell me what I should be thinking about when deciding whether or not to order the survey.

A. I, too, have attended closings where the bank attorney has failed to provide a survey although a survey was required under the contract. I have also received the same response you did, banks don't furnish surveys.

In most cases involving bank sales, a long addendum is attached to the contract containing numerous provisions, often among them being that the seller will not provide a survey. If this provision is part of the negotiation and is agreed upon by the parties, so be it. But to take the position that banks don't provide surveys when a survey is required under the contract is inexcusable. Unfortunately, you are at the closing table, the bags are packed, the movers are ready and you, the purchaser, are in no position to walk away. So most folks will do what you did, which was close anyway and swallow the loss.

Of course, your question is, what do I do now. Generally, a survey will cost you $300-$400. The benefits from obtaining a survey is that your lot lines will be identified, your easements will be identified, any encroachments will be identified and you can go back to the title company and obtain extended coverage on your owners title policy.

Identifying your easements is important because you can create problems by placing a permanent structure, such as a pool or shed, in an easement. Encroachments, meaning parts of your property "encroaching" on a neighbors property, or visa versa, are important because, for one, property can be lost over time when a neighbor openly utilizes your property for his or her benefit. Extended coverage is important because it affords coverage for losses that would not be otherwise be covered, such as losses arising out of easement or building line violations or encroachments.

Q. I signed a contract to purchase a foreclosed house. The contract stated that I had to close on the house by Dec. 3. The contract also stated that if I didn't close by Dec. 3, I would have to pay a penalty of $100 per day until I did close. My mortgage company told me that closing by that day wouldn't be a problem so I agreed with the penalty.

My mortgage company had all kinds of problems getting documentation it needed for the closing and the result was the loan was not ready to go by Dec. 3. None of the problems had anything to do with me. All the documents I needed to provide were given to the mortgage company weeks ahead of time.

We ended up closing on Dec. 13 and I had to pay an extra $1,000 to the seller, although I didn't do anything wrong. I feel someone else should pay this fee. What do you think?

A. This provision is very common in bank sales. I go over this provision with my clients carefully, making sure they understand its ramifications.

At this point, I don't see any way you will recover the money from the seller. The only issue is whether or not you can encourage another party to pick up or share your loss.

The obvious potential culprit is your mortgage company. What took so long? Were they diligent in processing your loan or did someone drop the ball? What caused the delays?

These days, loans often take longer than originally anticipated. This should have been discussed at the time the offer was made and reflected in the proposed closing date. Most attorneys and Realtors will explain the ramifications of these provisions and caution purchasers on attempting to insert short closing dates.

Most likely, you will end up paying $1,000 more for the property than originally planned. Hopefully, you still made a very good deal.

• Send your questions to Attorney Tom Resnick, 345 N. Quentin Road, Palatine, IL 60067, by e-mail to tdr100@hotmail.com or call (847) 359-8983.

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