You’ve chosen a builder and the home you want, with the perfect high-end finishes, all set on the ideal property. And since everything is new, from foundation to roof, surely there are no skeletons in the title closet. So there’s no need for title insurance, right?
If only that were the case. The truth is title insurance protects your investment even when you purchase a newly-built home. Read on to learn why.
When many people think of title defects, they envision long-lost heirs showing up, unpaid second mortgages or back taxes on the record books, or maybe even an estranged spouse making it clear they want their property back. That’s the stuff of news stories, the types of title problems that make it clear how owner’s title insurance is an essential part of buying property.
All of these issues can and do on occasion pop up when it comes to title defects. But property owners can run into issues, even if the home on the property is brand new, and even if no one has ever lived in the home before. How is that possible?
It’s because the property on which the house is built can have its own long and storied history, and its own undiscovered claims. And while lender’s title insurance protects your mortgage lender in the event of undiscovered title defects, it won’t do a thing for you as the buyer if you find out there’s an issue with the property itself, even if the house is built from scratch.
That’s where owner’s title insurance comes in.
You might be surprised at the breadth of problems that can arise. A parcel of land can turn out to be part of a larger piece of land with claims that have yet to be unearthed. That’s right; someone could claim ownership of the land upon which your home has been built — and in some cases it can be a piece of land to which several family members lay claim and which was wrongly sold to a developer without their permission. But more than that, there can be errors in public records and deeds that prevent a title search from uncovering an existing lien or other claim. In such cases, the owner of the property can be held responsible.
In new subdivisions, it’s also essential to make sure the property was subdivided correctly and that your home is on the correct piece of land. This clears up any question of ownership in the future.
Unfortunately, instances also arise where a builder does not compensate contractors who performed work on your new build, or the builder goes out of business. Contractors who go unpaid can actually file a claim against the owner of the property as the claim attaches to the real estate itself.
Title insurance on your new build can protect you from all of these potential problems.
Your title insurance company will investigate the history of your property and ensure you are protected from specific title defects. It’s a one-time expense that gives you confidence that you own the property you’ve purchased and can use it in the way you want to. A new home is so important to your family’s well-being and happiness, and owner’s title insurance is clearly an excellent way to protect you and your family in the future of your brand new home.