Is Title Insurance on a Newly Constructed Home Necessary?

Title insurance is an important part of any real estate transaction. Not only does it allow you to get information on liens and issues against a property based on past owners, it protects you against future claims against possession. Given the nature of title insurance, however, many wonder if it is really necessary on a newly constructed home. The answer to this question is, unequivocally, “Yes.” Here is an overview of why you should have new construction title insurance on your real estate.

Prior Owners

The biggest mistake a new homeowner can make is to assume that because there is no building on a lot, that they are the first owner. Remember, there can be title issues with land, not just buildings. It is possible and even likely that there have been several other owners of the land on which you are building your new home.
Title insurance will not only reveal prior owners, but whether there are problems with liens from failure to pay contractors, information about surveys and boundaries and other title issues. Without title insurance you could run into serious problems that you never imagined might crop up.

Peace of Mind

Even if there were no prior owners and if there were no liens, judgements or other problems, having title insurance can give you all-important peace of mind. Your lender is going to want to be absolutely certain that the title to your land is 100% clear before you begin construction. The only way to be sure of this is to have a title insurance policy.
Title insurance agents are experts in tracking down and clearing any issues that might exist. If your agent tells you the land is clear, you can be secure that they mean it. This will allow you to move forward with ease and will pacify your concerned lender.

Future Problems

Even with expert research, surprises sometimes crop up. It is possible that at some point after you have begun construction, or even after you move in, someone will show up with a supposed claim to the land on which you reside. Without title insurance, you can be in for a long, difficult and painful struggle. You could even lose the land and find yourself back at square one.
Title insurance makes sure that you are protected, should such a claim arise. Your title agent can provide vital information to protect your claim to be sure you get to keep your land. It will cover the legal fees you rack up defending your claim. Even should you lose the case, this insurance will provide some reimbursement so that you do not face a total loss.
In the end, new construction title insurance is a vital part of the building process. Never think that just because there is no building there, the land has a clean title. Insurance will give you security and peace of mind, and that is worth a lot. If you need a policy for your new project, email us at [email protected] or call (305) 901-5628.