What Happens in California When a Property Survey Reveals a Problem Before Closing?

Buying real estate in California can involve several layers of due diligence before a transaction reaches closing. One issue that can complicate a purchase is discovering a problem through a property survey. Boundary discrepancies, encroachments, easement concerns, and improvements that cross property lines can raise questions about what the buyer is actually purchasing and whether the transaction should proceed as planned.

For buyers and sellers in Oakland and throughout California, identifying a survey problem before closing provides an opportunity to investigate the issue and determine what steps may be appropriate before ownership changes hands.

What Can a California Property Survey Reveal?

A property survey identifies important physical characteristics of a parcel, including its boundaries and the location of certain structures or improvements. Depending on the property and type of survey performed, it may reveal problems that were not obvious during an ordinary inspection.

Common property survey issues can include:

• A fence that does not follow the legal property line
• A driveway that crosses onto neighboring property
• A garage, shed, retaining wall, or other structure extending beyond a boundary
• A neighboring structure encroaching onto the property being purchased
• Recorded or apparent easements affecting the property's use
• Discrepancies between existing improvements and the property's legal description
• Questions concerning access to the property
• Boundary disputes involving neighboring owners

These discoveries can be significant because a buyer may have entered the transaction with a different understanding of the property's boundaries or available use.

What Happens When a Survey Problem Is Found Before Closing?

Discovering a survey issue does not necessarily mean that the transaction must be canceled. The appropriate response depends on the nature of the problem, the purchase agreement, applicable contingencies, title matters, and whether the parties can resolve the issue.

The buyer may need to determine how significantly the survey problem affects the property's value or intended use. For example, a minor fence discrepancy may present different concerns than discovering that a substantial portion of a driveway crosses a neighbor's land.

The parties may negotiate a solution before closing. Depending on the circumstances, this could involve correcting a boundary issue, addressing

an encroachment, obtaining an easement, modifying the purchase terms, or postponing closing while additional information is gathered.

Can a Buyer Back Out Because of a Property Survey Problem?

Whether a California buyer can terminate a real estate transaction after discovering a survey problem depends heavily on the purchase contract and the status of applicable contingencies.

California real estate agreements commonly establish deadlines for investigations and other due diligence. A buyer who discovers a significant property issue while an applicable contingency remains in effect may have contractual options that would not necessarily remain available after contingencies have been removed.

Because improperly terminating a purchase agreement can potentially place a buyer's deposit or other contractual rights at risk, buyers should carefully review their agreement before deciding not to close.

Can the Buyer Renegotiate the Purchase Price?

A survey problem may lead to further negotiations between the buyer and seller. If the issue affects the property's value, usable area, access, or future development potential, a buyer might request a price adjustment or another contractual solution.

The seller is not automatically required to accept a proposed modification simply because a survey revealed a concern. Much depends on the purchase agreement, the nature of the defect, disclosure obligations, and the willingness of both parties to reach a resolution.

How Do Encroachments Affect California Real Estate Transactions?

Encroachments can be particularly important in California property transactions. An encroachment occurs when a structure or improvement extends onto property belonging to someone else.

For example, a survey could show that a neighbor's fence extends several feet onto the property being purchased. Alternatively, it could reveal that part of the home, garage, driveway, or landscaping on the property being purchased actually extends onto neighboring land.

These situations may raise questions about ownership, property use, maintenance responsibilities, future improvements, and potential disputes with neighboring property owners. Buyers should understand the scope of an encroachment before accepting the property.

Easements Can Also Affect Property Use

A survey may identify an easement crossing the property. Easements can allow another person, utility company, government entity, or neighboring property owner to use part of the land for a particular purpose.

An easement does not automatically make a property undesirable, but buyers should understand its location and legal effect. An easement could potentially affect where a buyer can build, install improvements, maintain landscaping, or otherwise use a portion of the property.

Reviewing survey findings together with the title report and recorded documents can provide a clearer picture of the rights affecting the land.

Why Buyers Should Address Survey Problems Before Closing

Closing a transaction without resolving or understanding a known survey issue can create complications later. Once the buyer becomes the property owner, a boundary or encroachment issue could develop into a dispute with a neighbor or interfere with plans for the property.

Addressing the problem beforehand may allow the buyer to investigate its legal significance, negotiate with the seller, review title implications, and make a more informed decision about whether to proceed.

This can be particularly important in Oakland, where property boundaries, shared driveways, fences, older improvements, and densely developed parcels can create complicated real estate questions.

Legal Assistance With Oakland Property Survey and Boundary Issues

A survey problem discovered shortly before closing can create uncertainty for both buyers and sellers. The legal consequences depend on the purchase agreement, the survey findings, title documents, disclosures, and the specific characteristics of the property.

At Martin APC, we can provide legal assistance to buyers, sellers, and property owners in Oakland dealing with California real estate matters. If a property survey reveals an encroachment, boundary discrepancy, easement concern, or another issue before closing, legal guidance can help you evaluate your contractual rights and available options.