Title commitments and surveys are the foundation of commercial real estate due diligence. Yet many buyers don't fully understand what these documents reveal—or how seemingly minor issues can create major problems.

This guide explains what to look for in title reports and surveys, common issues that arise in Arizona transactions, and how to address problems before they derail your closing.

Understanding the Title Commitment

A title commitment (also called a title report or preliminary title report) is the title company's promise to issue a title insurance policy, subject to certain conditions and exceptions. It tells you what the title company found when it searched the public records.

Key Sections of a Title Commitment

Schedule A: The Basics

Effective Date: The date through which records were searched—any recordings after this date won't appear

Policy Amount: The proposed coverage amount (usually the purchase price)

Legal Description: The property's legal description from recorded documents

Vesting: Current ownership—verify this matches your seller

Schedule B-I: Requirements

Conditions that must be satisfied before the policy will be issued:

  • Payment of premium
  • Recording of deed from seller to buyer
  • Release of existing liens
  • Satisfaction of any judgments against the seller

Schedule B-II: Exceptions

Items the title policy will NOT cover. This is where the real due diligence happens. Every exception needs to be reviewed against your intended use of the property.

Common Title Issues and Red Flags

Liens and Encumbrances

Financial Liens to Watch For:

  • Mortgages/Deeds of Trust: Must be released at closing
  • Judgment Liens: Court judgments against the owner attach to real property
  • Tax Liens: Unpaid property taxes, IRS liens, or state tax liens
  • Mechanic's Liens: Claims by contractors or suppliers for unpaid work
  • HOA/Assessment Liens: Unpaid association dues or special assessments
  • Child Support Liens: Can attach to real property in Arizona

All liens should be paid off and released at closing. Get payoff statements early—some lenders take weeks to provide them.

Easements

Easements grant others the right to use your property for specific purposes. They're often the most significant—and most overlooked—title issues.

Types of Easements:

Utility Easements: Rights for electric, gas, water, sewer, or telecommunications. Check their location against your building plans.

Access Easements: Rights of way for neighboring properties. May affect parking or future development.

Drainage Easements: Rights for stormwater flow. Building in these areas is typically prohibited.

Private Easements: Agreements with neighbors for shared driveways, parking, or other uses.

Conservation Easements: Restrictions on development to protect natural features.

Always obtain and review the actual easement documents—the title commitment only summarizes them. The details matter.

CC&Rs and Deed Restrictions

Covenants, Conditions, and Restrictions (CC&Rs) are private agreements that run with the land. They can significantly limit what you can do with the property.

CC&R Issues to Investigate:

  • Use Restrictions: Prohibited uses that may include your intended business
  • Architectural Controls: Requirements for design approval before building or renovating
  • Signage Restrictions: Limits on size, type, or placement of signs
  • Operating Requirements: Hours of operation, parking ratios, maintenance standards
  • Assessment Obligations: Ongoing dues and special assessment authority
  • Transfer Restrictions: Rights of first refusal or approval requirements

Boundary and Legal Description Issues

  • Gap in Chain of Title: Missing deed or unclear conveyance in ownership history
  • Legal Description Errors: Metes and bounds that don't close or lot/block errors
  • Boundary Disputes: Conflicting claims with neighbors
  • Adverse Possession Claims: Long-term use by others that may have created ownership rights

Access Issues

Legal access to a public road is essential. Don't assume it exists just because you can drive to the property.

Access Red Flags:

  • Property is landlocked with no recorded easement to public road
  • Access depends on license (permission) rather than easement (right)
  • Access easement has conditions or can be terminated
  • Access road is private with shared maintenance obligations
  • Access requires crossing railroad or government land

Understanding ALTA Surveys

An ALTA/NSPS Land Title Survey is a detailed map of the property showing boundaries, improvements, easements, and other features. It's the only way to know where things actually are on the ground.

Why Surveys Matter

A title commitment tells you what's in the public records. A survey tells you what's actually on the property. The two together reveal problems neither shows alone:

  • Buildings that cross property lines
  • Improvements built within easements
  • Encroachments from neighboring properties
  • Structures that violate setback requirements
  • Actual location of recorded easements

Key Survey Elements

What the Survey Should Show:

Boundaries: Property lines with monuments and measurements

Improvements: Buildings, parking areas, fences, walls, signs

Easements: Location of recorded easements plotted on the ground

Setbacks: Required setback lines from zoning code

Encroachments: Any improvements crossing property lines or easements

Access: Points of access to public roads

Flood Zones: FEMA flood zone designations

Utilities: Visible utility lines, poles, meters, manholes

Table A Optional Items

ALTA surveys can include optional items from "Table A." Consider requesting these based on your transaction:

  • Item 1: Monuments placed (not just found)
  • Item 6: Parking space count and striping
  • Item 8: Substantial features within 5 feet of property lines
  • Item 11: Location of utilities from record documents
  • Item 16: Evidence of wetlands
  • Item 18: Building footprints with square footage
  • Item 19: Building heights

Common Survey Problems

Encroachments

Types of Encroachments:

  • Your improvements on neighbor's land: You may need to remove them or obtain an easement
  • Neighbor's improvements on your land: May require an encroachment agreement or legal action
  • Improvements within easements: Utility company may have right to remove them
  • Improvements across setback lines: May be code violations requiring variance or removal

Minor encroachments (a few inches) are common and often addressed with title endorsements. Major encroachments may require negotiation, legal agreements, or deal restructuring.

Gap or Overlap

Sometimes the legal description doesn't match the physical boundaries, creating:

  • Gap: A strip of land between your property and the neighbor's that neither owns
  • Overlap: Both you and your neighbor claim the same strip of land

These issues require correction through quiet title actions, boundary line agreements, or quitclaim deeds from affected parties.

Flood Zone Issues

The survey should show FEMA flood zone designations. If any part of improvements is in a Special Flood Hazard Area (Zone A or AE), you'll need:

  • Flood insurance (lenders require it)
  • Elevation certificate
  • Potentially a Letter of Map Amendment (LOMA) if the mapping is incorrect

Addressing Title and Survey Issues

Title Objections

Most purchase agreements give buyers a deadline to object to title issues. Your objection letter should:

  • Identify each specific exception you object to
  • Explain why the exception is problematic
  • State what resolution you require (removal, endorsement, indemnity)

Common Solutions

Ways to Address Title Issues:

Removal: Seller pays off liens or obtains releases

Title Endorsements: Additional coverage for specific risks (survey, access, zoning)

Indemnity Agreements: Seller agrees to defend against specific claims

Escrow Holdbacks: Funds held after closing to address unresolved issues

Price Adjustments: Reduction for issues that can't be cured

Affidavits: Sworn statements to satisfy title company requirements

Title Insurance Endorsements

Endorsements expand your title policy coverage beyond the basic policy. Common endorsements include:

  • Survey/ALTA 9: Insures against survey-related defects
  • Access: Insures legal access to public road
  • Zoning: Insures current use complies with zoning
  • Contiguity: Insures multiple parcels are contiguous
  • Subdivision: Insures property was properly subdivided
  • Mineral Rights: Coverage for severed mineral estates

Arizona-Specific Considerations

Water Rights

In Arizona, water rights are particularly important. Title reports may reveal:

  • Certificates of Assured Water Supply requirements
  • Groundwater rights and permits
  • Surface water rights claims
  • Irrigation district assessments

Mineral Rights

Arizona has significant mineral activity. Severed mineral estates give others the right to access and extract minerals, potentially affecting surface use. Review any mineral reservations carefully.

State Trust Land

Properties near Arizona State Trust Land may have unique access or use restrictions. Verify boundaries and any lease arrangements.

Best Practices for Title and Survey Review

Due Diligence Checklist:

  • Order title and survey on Day 1 of due diligence
  • Review title commitment and survey together
  • Obtain and read all recorded exception documents
  • Plot easements on the survey to check for conflicts
  • Verify legal description matches survey boundaries
  • Check for access issues and verify access is by easement, not license
  • Review CC&Rs for use restrictions affecting your plans
  • Submit title objections before the contractual deadline
  • Request appropriate endorsements for identified risks
  • Confirm all requirements are satisfied before closing

Need Help Reviewing Title or Survey?

Our team reviews title commitments and surveys for commercial real estate transactions throughout Arizona. We help identify issues early and negotiate appropriate solutions.

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