"Texas, often referred to as the Lone Star State, is a thriving hub for economic growth and innovation, making it an attractive destination for commercial real estate investment." - Chris Evans

The Importance of Land Surveys in 1031 Exchanges and Investment Property Transfers

In commercial real estate, timing and accuracy are everything — especially during a 1031 exchange.

These transactions allow investors to sell a property, reinvest in another of equal or greater value, and defer capital gains taxes. It’s one of the smartest tax strategies in real estate — but it’s also one of the riskiest if the details aren’t handled correctly.

Amid the legal contracts, escrow timelines, and financing paperwork, one key element keeps the process running smoothly: a land survey.

A professional survey doesn’t just confirm what you’re buying — it verifies that your exchange qualifies under IRS, lender, and title company requirements. Here’s why land surveys are the backbone of successful 1031 exchanges in Texas.

1. Understanding the 1031 Exchange Process

Under Section 1031 of the Internal Revenue Code, property owners can defer capital gains taxes by reinvesting proceeds from a sale into a “like-kind” property.

However, these deals have strict conditions:

• The replacement property must be identified within 45 days of the sale.

• The purchase must close within 180 days.

• Both properties must be used for investment or business purposes.

Because time is short, accurate documentation — including surveys — is critical to prevent closing delays.

2. Verifying Legal Descriptions and Boundaries

A land survey establishes precise legal descriptions for both the relinquished and replacement properties.

Why this matters:

• Confirms that both properties qualify as “like-kind” under IRS standards.

• Ensures that recorded deeds, plats, and contracts all match.

• Protects investors from inheriting encroachments, easements, or title defects.

Without a survey, a title company may refuse to issue coverage — or worse, an IRS audit could invalidate the exchange due to unclear property definition.

3. Protecting Title and Lender Compliance

Lenders financing the replacement property require an ALTA/NSPS Land Title Survey to confirm boundaries, easements, and improvements.

Surveys help by:

• Verifying that all recorded easements are properly located.

• Confirming access, utilities, and zoning compliance.

• Ensuring the title policy reflects the true condition of the land.

This step eliminates exceptions on Schedule B and reassures lenders and underwriters that the investment is sound.

4. Identifying Risk Before Closing

Time pressure makes 1031 transactions vulnerable to oversight.
A survey gives investors and attorneys a full view of the property before funds transfer.

Common risks uncovered by surveys include:

• Overlapping fences or structures.

• Unrecorded easements or encroachments.

• Drainage or topographic issues affecting usability.

Each of these could derail financing or reduce the property’s appraised value — making the deal nonviable for IRS deferral.

5. Simplifying the Exchange of Multi-Parcels and Assemblages

In Texas, investors often exchange large tracts or combine multiple parcels into a single redevelopment site.

A survey consolidates all parcels into a unified plat with accurate boundary data — streamlining the closing process and preventing confusion about lot lines or ownership.

Benefits:

• Simplified documentation for lenders and attorneys.

• Clear recording for tax and title purposes.

• Protection from boundary disputes in future development phases.

6. Providing Documentation for IRS and Legal Records

The IRS requires exchanges to be “substantially similar” — a concept that survey data supports by providing evidence of land type, acreage, and value.

Survey plats serve as verifiable proof in audits, legal reviews, or future sales.

Why it matters:

• Supports accurate reporting of property characteristics.

• Prevents compliance issues during audits.

• Establishes clear, defensible records for years to come.

7. Long-Term Investment Protection

A survey is more than a closing formality — it’s an asset that continues to protect your investment long after the exchange.

If you plan future improvements, zoning changes, or refinances, a certified survey provides the baseline documentation to move forward without delays.

In the high-stakes world of 1031 exchanges, a land survey is your first line of defense against title risk, compliance issues, and IRS challenges.

By confirming what you own and ensuring that every inch aligns with legal and financial standards, surveys keep your investment strategy strong — today and for the future.

When accuracy determines eligibility, South Texas Surveying provides the precision and professionalism Texas investors trust to make every exchange seamless.