At Homeland Title, we recommend title insurance for every home, whether it’s had 10 owners or zero. Why is title insurance important for newly constructed homes that have yet to have a single owner?
Title Insurance 101
Title insurance protects home buyers from any debts or losses tied to the property they purchased. If a home seller did not really own the home that they sold, or there is a lien against the land the home is built on, you will be financially protected from the costly aftermath. A title insurance company will also thoroughly examine the history of the property to ensure that the title is clear. Car insurance protects drivers from things that happen on the road after the policy begins. Title insurance protects homeowners from things that occurred with a home or property in the past.
The Property Matters
The primary reason why you need title insurance for a newly constructed home is that the land has probably had numerous previous owners, even if the home has had none. If a previous landowner had an unpaid debt or claimed the property without rightful ownership, it could put your newly constructed home into jeopardy. The same problem could occur if contractors who built your home were unpaid or partially paid, and they choose to sue the home builder.
Your Lender Is Doing It
There are two types of title insurance policies, those for lenders and those for owners. A lender will require title insurance to ensure that the property and title they are facilitating the purchase of are free of any issues. The lender’s policy will cover the amount of the mortgage. While the lender will require title insurance to protect the investment that they are making, it will not protect you unless you purchase an owner’s policy. If your lender requires title insurance because they know the cost of not owning a policy, shouldn’t you do the same?
Sometimes the County Will Cut Corners
Finally, take Fairfax County, Virginia as an example of what title insurance can protect you from. During the 2000s, when new constructions were popping up throughout the county, the Virginia state government faced thousands of applications for new homes and not enough time to process them all. To meet buyer and builder demand, employees cut corners and rushed applications through. Some homes that were approved and completed actually exceeded county limitations for building height. A few years later, the county decided to enforce those building codes and asked homeowners to lower the roof or grading to meet requirements. Homeowners who had title insurance had a portion of the bills covered by title insurance. Homeowners who skipped title insurance had to foot the entire bill themselves.
Title Insurance for Newly Constructed Homes from Homeland Title & Escrow
Homeland Title & Escrow offers a broad range of title services, including complimentary consultations for first-time homebuyers. To learn more about our services, give us a call at (410) 544-6700.