Do I Need an ALTA Survey When Buying Commercial Real Estate in Mississippi?

One of the questions that comes up regularly in a commercial real estate transaction is whether the buyer really needs to spend the money on a survey.

The short answer is: Mississippi law generally does not require a buyer to obtain an ALTA/NSPS Land Title Survey before purchasing commercial real estate. But that does not mean buying without one is always a good idea.

Whether a survey is necessary often depends less on a statute and more on the property itself, the purchase agreement, the lender, the title insurance requirements, and the buyer’s intended use of the property. Mississippi law does not impose a general survey requirement for an ordinary commercial closing, although there are narrow statutory situations in which a boundary survey is expressly required.

In many commercial transactions, the better question is not simply, “Am I required to get a survey?” It is: What risk am I accepting if I close without one?

What Does a Survey Tell You That a Title Search Does Not?

A title examination and a land survey answer different questions.

A title examination primarily tells us what the public land records say about the property. We examine deeds, deeds of trust, easements, restrictions, judgments, tax matters, and other recorded documents affecting title.

A survey helps answer a different question: How do those legal rights and descriptions relate to the property that actually exists on the ground? That distinction can matter a great deal in a commercial transaction.

A survey may reveal that a building crosses a property line, that a parking lot extends onto neighboring property, that a recorded easement runs directly through the area where the buyer intends to construct an addition, that an access road is not located where everyone assumed it was, or that the acreage on the ground does not match what the buyer thought it was purchasing.

It can also identify gaps or overlaps between adjoining parcels, fences that do not follow the deed line, utility easements, rights-of-way, roads and driveways crossing the property, and other physical conditions that may never be apparent from reading the deed alone.

Mississippi courts have dealt with many of these exact problems, including boundary disputes, visible driveways crossing surveyed property lines, adverse possession claims, prescriptive easements, and conflicts between legal descriptions and the property actually being conveyed.

A Real Mississippi Commercial Transaction That Shows Why This Matters

A useful example is Point South Land Trust v. Gutierrez, a Mississippi Court of Appeals case involving a multimillion-dollar commercial property transaction in Biloxi.

The property was being marketed as a gaming site. During the transaction, the parties discovered a discrepancy between an earlier survey and the legal description contained in the land records. When the individual parcels were plotted together, they did not properly align, creating what the case described as a “gore.” A subsequent survey was performed in connection with the lender and title insurance requirements.

The survey also disclosed something else.

The contract described approximately 9.2 acres. The survey showed approximately 8.37 acres. The buyer’s lender then required an updated survey and appraisal before financing could be finalized.

That case is a good illustration of what happens in the real world. The survey was not being obtained because Mississippi had a statute saying, “Every commercial buyer must obtain an ALTA survey.” It became important because of the contract, the lender, the title issues, and the actual physical configuration of the property.

Those are often the reasons a commercial survey matters.

What About Title Insurance?

This is another important piece of the analysis.

A title insurance policy is not automatically a substitute for a survey.

Commercial title commitments commonly contain exceptions for certain matters that are not shown in the public records but could be discovered through an accurate survey and inspection of the property. These can include rights of parties in possession, acreage deficiencies, boundary disputes, encroachments, roadways, unrecorded easements, lack of access, and other matters that an accurate survey and inspection would disclose.

That is important because buyers sometimes think: “I’m buying title insurance, so I don’t need a survey.”

That is not necessarily true.

The commitment and proposed policy need to be reviewed carefully to determine what the title company is actually willing to insure. Depending upon the transaction and underwriting requirements, providing an acceptable survey may allow the title insurer to modify or remove certain general survey exceptions and instead identify specific matters shown on the survey.

In other words, a survey can help transform an unknown risk into a known one.

And in commercial real estate, knowing about a problem before closing is usually much better than discovering it after the money has changed hands.

Visible Conditions Can Matter Too

A commercial buyer should also pay attention to what is physically happening on the property.

Mississippi recognizes the concept of inquiry notice. A person can be charged with knowledge of facts that a diligent investigation would have revealed when the person already knows facts that would cause a reasonably prudent person to question the condition of title.

Consider a few examples.

Suppose the neighboring business has used a driveway across the property for twenty years. A fence sits thirty feet inside what the deed appears to describe as the boundary. Another owner regularly parks equipment on a portion of the tract. A road crosses the property but no corresponding easement appears in the title search.

Those are not conditions a commercial buyer should simply ignore.

Mississippi adverse possession law generally involves ten years of actual, open, notorious, visible, hostile, exclusive, and continuous possession. Mississippi courts have addressed situations in which visible driveways and long-term commercial use of disputed property became important evidence in determining ownership rights.

Similarly, Mississippi recognizes prescriptive easements arising from long-term adverse use. In Alford v. Cotton Row Hospitality, LLC, a commercial property owner asserted rights based upon more than forty-five years of use of neighboring property to access and maintain the exterior of a building.

The lesson is straightforward: what you see on the ground may be just as important as what you see in the courthouse records.

So, When Should a Commercial Buyer Get an ALTA Survey?

There is no single answer for every property. For a straightforward transaction involving a recently surveyed property with clearly established boundaries, direct road access, no significant improvements near the boundary lines, and no lender or title requirement, a buyer may decide that a new ALTA survey is unnecessary.

The analysis changes quickly, however, when the property is improved, expensive, being financed, assembled from multiple parcels, subject to numerous easements, intended for redevelopment, or dependent upon particular access, parking, utilities, setbacks, or acreage.

I become particularly concerned when there are buildings or parking areas near property lines; multiple parcels being combined; important access or utility easements; visible roads or driveways used by others; inconsistencies between the deed, tax map and physical property; significant planned construction; uncertain acreage; adjoining owners using portions of the property; or a lender or title insurer requesting survey coverage.

Those are exactly the situations where spending money on a survey before closing may prevent a much more expensive dispute later.

An ALTA Survey Is Due Diligence, Not Just Another Closing Expense

Commercial buyers understandably watch transaction costs. Surveys can be expensive, particularly on large or complicated properties.

But the cost should be viewed in relation to the transaction.

If you are buying a commercial property the question is not whether a survey costs money. The question is whether you are comfortable purchasing the property without independently confirming its boundaries, improvements, access, easements, and other physical conditions.

A survey will not eliminate every possible real estate problem.

It can, however, identify many problems at the point in the transaction when the buyer still has options: require the seller to address the issue, renegotiate the purchase price, modify the development plan, obtain additional title insurance coverage, or decide not to close.

After closing, those options can become considerably more expensive.

Before You Close

If you are purchasing commercial real estate in Mississippi, the survey decision should be made as part of the overall title and due diligence review—not as an afterthought a few days before closing.

The purchase agreement, title commitment, financing requirements, existing surveys, proposed use of the property, recorded easements, access, and physical condition of the site should all be considered together.

Mississippi law may not require an ALTA survey for the ordinary commercial purchase. But on the right transaction, a good survey can tell you something every commercial buyer wants to know before signing the closing documents: Are you actually getting the property you think you are buying?

McMillian Law, PLLC assists buyers, sellers, lenders, and businesses with commercial real estate transactions, title examinations, title insurance, and closings throughout Mississippi. This article is for general informational purposes only and does not constitute legal advice.