We are seeing an increasing number of title companies requiring an improvement location certificate (ILC) before they will issue a title insurance commitment.  An ILC differs from a survey in that the ILC simply identifies the location of the property improvements (buildings), encroachments, and easements, but it is not evidence of the exact boundaries of the property.  Although it is not a full survey, it's usually sufficient documentation for properties that are located within subdivisions.  It is less expensive than a survey, also. 

If a real estate agent enters "N/A" in the survey section of the sales contract, indicating that an ILC is not needed, that has absolutely no bearing on whether an ILC is actually needed.  The title company decides whether they need one before they will issue the title commitment.  If the contract states that an ILC is not needed, but the buyer will pay for it if it is needed (we see this a lot), then your buyer is on the hook for the ILC fee if the title company needs one.  On deals where money is tight for the buyer, this can be a big problem.

 
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2 Comments on Who Decides if an ILC is Needed?

JUL
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Hi Chris, it seems it is up to the company's underwriting guidelines and the individual examiner.  For instance, when I worked in "Title Land" we did not need to require an ILC if the property was not new construction, and was located within a Lot and Block subdivision.  However, if the examiner had knowledge of boundary issues within that subdivision, they could require an ILC. 

If the ILC is a problem for the buyer, I would suggest calling the Title Company to see why they need it, and if they will waive the requirement.  In this economy, examining may be outsourced, so a call to the local Title Officer might help in deleting the requirement.

10:17am • #1

Mary -- Good advice about calling the title company and asking if the ILC requirement can be removed.  We always ask and about half the time, they will delete it. 

My wife used to be an underwriter for a lender and her advice to me has always been to ask why an underwriter is requesting something that seems a little odd.  Sometimes the response we get is, "Gee, I don't have any idea why I asked for that - I'll just delete it." 

Ask and you shall receive (sometimes) :-)

Thanks for your comment!

10:34am • #2

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Chris Thomas

Denver, CO

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