Title Insurance and Your Newly Built Home
At first glance, title insurance seems like something you would want for an older home. Perhaps your home has had 3 previous owners, and you want to ensure that they are all properly addressed so you can move in with a clean title. However, newly constructed homes have their own intricacies that a title company will need to assist you with.
For those who are looking at their brand new dream home, let’s dig into the roots of your property ownership and answer the question you might be thinking to yourself: “Why do I need title insurance if I’m the first person to own my home?”
Not only do you need to consider the home itself, but also the land it sits on top of. While you may be the first owner of a newly constructed home, the chain of title on your property has likely moved from the landowner, to developer, and then to you. With every change of hands, there is the opportunity for ownership risks. Here are a couple things to consider:
Hidden Liens or Claims
Even with a newly constructed home, there may be unresolved liens or financial obligations tied to the property. These could include mechanics' liens from contractors, subcontractors, or suppliers who were not fully paid for their work or materials.
Errors in Public Records
Mistakes in public records, such as errors in the property’s legal description or documentation errors during the transfer of land, can affect ownership rights. Title insurance protects against such issues.
Previous Land Ownership Issues
The land your new home is built on may have had multiple owners in the past, and unresolved disputes, boundary issues, or improperly recorded deeds could impact your ownership.
Easements or Restrictions
Unrecorded easements or restrictive covenants tied to the property can limit how you use your land. Title insurance identifies and mitigates the risks associated with these encumbrances.
Fraud or Forgery
While rare, instances of fraud or forgery in past transactions involving the property’s title could surface, potentially jeopardizing your ownership. Title insurance protects against these scenarios.
A title search will find these unexpected hiccups, and your title insurance policy will protect you from them, assuring you and your mortgage lender that your property ownership is in the clear.
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