Closing costs may go even higher

September 07, 1994|By Lorraine Mirabella | Lorraine Mirabella,Sun Staff Writer

Home settlement costs in Maryland, already among the highest in the nation, could rise by hundreds of dollars for some homebuyers when new state standards for land surveyors take effect, an industry group said yesterday.

The Board for Professional Land Surveyors, which oversees and sets industry standards in the state, is expected today to approve a measure that would require broader use of actual boundary surveys.

Surveyors typically visit properties and make cursory inspections of lot lines, checking against maps and records. Under the proposed standards, whenever there are questions about actual boundaries, surveyors would need to take actual measurements on the site. That can take three to four times longer.

Russell Lowman, a board member, said the provision may increase costs in some cases but insisted that it also will protect consumers against boundary errors when they sell or purchase a home.

The proposal grew out of a legislative mandate to set minimum standards for the industry. Members of the state Board for Professional Land Surveyors, which has handled consumer complaints against surveyors, began drafting regulations in conjunction with the industry more than a year ago.

But the Maryland Society of Surveyors opposes what it views as ambiguous wording that will increase liability, restrict the use of new technology and result in poor customer relations while forcing surveyors to charge clients for services they don't want or need. Realtors and title attorneys said increased costs of the surveys would make homes across the state less affordable.

"You'd have a dramatic increase in settlement costs," said Arthur Davis III, president of the Maryland Association of Realtors. "People would have to come up with more money than they have for something they don't really need."

Maryland's transfer and property taxes already rank as the fourth-highest in the nation (after Pennsylvania, New York and Delaware), according to a 1988 survey done for the National Association of Realtors, which showed charges of $3,827 on a $104,000 house. At settlement, buyers also pay points, or a percentage of the loan; prepayment of interest; homeowner's, mortgage and title insurance; and attorney's fees, all of which can vary.

The visual survey that now costs $150 could increase to $1,000 or more under the new standards, said Joel M. Leininger, president of the Society of Surveyors. He said the industry believes the need to conduct actual surveys will occur more often with rowhouses that sit close to property lines and townhouses whose side walls sit on lot lines.

"No surveyor, simply by visual observation, could determine whether the walls were 'clearly within' the property lines or not," Mr. Leininger said. "He would have no choice but to re-establish the theoretical location of the street line, a costly process."

Lenders and title companies normally require only location surveys.

"All a location survey does is says a house or improvement is on the lot, and that's all [lenders] really care about," said Michael Gisriel, vice president of Fountainhead Title Co. in Columbia. "To fix the boundaries means more work and more expense. The average homeowner doesn't need that. It really would increase the closing costs, something we don't want to see in this state."

Under the proposed regulations, boundary surveys would be required for sales of all buildings or even improvements such as fences located on or near property lines, said Mr. Leininger, a principal with S. J. Martenet & Co. Inc.

"The proposed regulations fall far short of their stated goal of protecting the public and, in fact, unwittingly harm the public by imposing unnecessary procedures which the public will end up paying for," Mr. Leininger said in a letter asking Gov. William Donald Schaefer to delay implementation of the rules.

But Mr. Lowman, a vice president at John E. Harms Jr. and Associates in Pasadena and a member of the state board, said the industry has overestimated the added expense to homebuyers. The regulations still give the surveyor flexibility, he said.

"I don't think this will increase by a large amount the number of boundary surveys to be performed," he said. "That's a protection for the buyer and a protection for the title company."

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