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Is Title Insurance Necessary for Newly Built Home?

16 Sep 2020

Newly Built Home? Buying a property in Florida is the dream of millions spread worldwide. Hence, the local real estate offers a vast number of options, including newly built homes.

Unlike many people may think, a new home can land the buyer in a serious land ownership crisis. Why? The various reasons include legal ownership issues, unpaid contractors, and property location.

In this article, we will teach why title insurance is so important for a newly built home. Also, we will show how you can protect yourself from such situations by anticipating unforeseen issues.

 

Understanding What Title Insurance Is:

Title Insurance is a form of indemnity insurance that protects lenders and homebuyers from financial loss sustained from defects in a title to a property. It is mainly found in the U.S, backed by proper legislation and regulations.

Here in the U.S (and in Florida, consequently) the majority of title insurance policies are written on the land. This type of approach differs from other countries abroad, which have different systems concerning land registration.

Newly built homes, despite being recently built, might reveal unsighted issues- which makes title insurance a strategic essential. Several issues can arise out of sudden, such as:

 

Unpaid Contractors:

This is not uncommon that contractors who were not fully paid for building a house choose this approach. Not satisfied with the situation, they claim on the title of the land the new house was built on. Being protected by title insurance it is a way to solve this issue.

Legal Ownership of the Property:

This is another common issue involving newly constructed homes. It refers to unexpected title issues involving legal ownership of the property on which the home has been built.

It happens when a third-party claims ownership over the property. It is not impossible, considering the land where the home was built is not new, despite the new construction.

This situation occurs often when multiple family members share ownership of a piece of land. When one of the members decides to sell the land without the permission of the others, they can claim ownership.

Hence, a recent buyer of a newly built house constructed in such land would be in a risky situation. As the land had been originally bought, the risk for title defect is huge- which is a serious issue.

Location of the Property:

It is essential to ensure when buying a newly built house that it is located on the correctly identified lot. The lot must be within the right subdivision, otherwise, the buyer can risk facing ownership claims in the future.

 

How Important Is Title Insurance to Avoid Such Issues?

Title insurance will defend both buyers and lenders against any claims. It is not unusual that mortgage lenders require buyers to purchase a lender’s policy. It is important to remember that the lender’s policy does not protect buyers. Hence, buyers are recommended to invest in a separate owner’s title policy to protect themselves.

Anyone interested in buying a newly built home in Florida will need Title Insurance. It is vital for security purposes, as it helps the buyer to defend against claims against title ownership or offering compensation for certain financial losses.

Now you know the importance of proper title insurance for the newly built home. Why not take a step further? If you want to buy a property in South Florida, especially a newly built home, we can guide you throughout the process.

Do You Need Help Buying A Newly Built Home In South Florida? Marina Title Can Help You!

We are experts in procedures involving title and escrow. We are the best to guide and instruct you when it comes to title insurance. Contact us by calling us to (305) 901-5628 or sending us an email to Romy@MarinaTitle.com and get help now.

 

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