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Why Should You Get Title Insurance On A New Construction Home?


new construction homes

Title insurance is often sidestepped despite being a very vital part of the home-buying process. It is a layer of protection for those buying property should any title-related issues from prior owners arise after ownership has been transferred. 


But should you get title insurance on a new construction home?  


New construction refers to a brand-new home that no one has lived in. This house was built and the homebuyer will be the first homeowner. Yet, there is a good chance that someone has previously owned the land — and that’s where hidden title issues may arise. 


Let’s take a closer look at the importance of title insurance and what you need to know about obtaining a policy for your new construction home.


What is Title Insurance? 

Title insurance for new construction protects buyers from any title defects that may appear after a piece of real estate changes hands. A title search is done by reviewing the property’s history through records that are recorded in county archives. As a result, there is always a chance that paperwork may be missing or filing errors may occur. 


What’s more, liens and judgments can be attached to the property. If they go unpaid by the previous owner, the new owner will then become responsible for them. The same holds for any outstanding HOA fees and property taxes, too. 


These are only a few of the many ways in which title insurance can offer protection. With a policy in place, title issues such as these will be handled without jeopardizing the title rights of the new owner — or creating a catastrophic loss. 


Types of Title Insurance

The two main types of title insurance include an owner’s policy and a lender’s policy. 


An owner’s title insurance policy protects the buyer. This policy will remain in effect until the property is sold to a new owner. 


A lender’s title insurance policy protects the lender until the mortgage is paid off or until it is satisfied with a refinance. Lenders often make this a requirement for closing as it reduces their risk. 


Each of these policies only requires a one-time fee at closing. 


Title Insurance for New Construction

A new construction home is not going to have a previous owner — the buyer will be the first owner. But that doesn’t mean title insurance isn’t necessary. It is just as important for new construction as it is for a home that has had dozens of new owners over the years. 


Further, the land has likely changed hands at least once before building the new home and this automatically increases the risk of title issues. 


You will want to take every step possible to ensure that your rights are protected when making this large investment. That means even if you are buying the land from a developer who claims a title search was performed, you still want to proceed with your own. 


Outstanding taxes, title insurance defects, mechanics liens, and more can interfere with your ownership rights or require you to pay out large sums of money. Protect your new construction home with a title insurance policy before you close. 


Need Title Insurance For Your New Construction Home? 

At Blue Pointe Title, we understand just how important title insurance can be — even for new construction homes. If you want to get through your title process without hassle and gain the protection you need from future title issues, we are here for you. 


Contact us today. 

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