So, you’re building your own home and among all of the other things, you’ve got questions about title insurance. The home construction process is much more involved than simply buying a house. Purchasing land for development, planning your construction, and managing contractors all come with unique challenges. You need to know what you’re getting into, and you need to know the steps to take to protect your financial and legal position.
Does New Construction Require Title Insurance?
In most cases, home buyers are required to purchase title insurance to acquire a mortgage. In all cases, it’s not something to neglect. Title insurance can protect you and your lender’s interest in the property in the event something goes wrong with documentation or somebody presses a claim on your property.
But, you may be curious if title insurance is required, or advised, in the event you’re initiating new home construction. The answer is a resounding yes!
If anything, the need for a quality title insurance policy is more pressing with new home construction, as new home construction involves risks outright purchases do not. Read on to find out the kinds of liability coverage to look out for in your title insurance policy.
What Does Title Insurance Cover?
Whether you’re buying or building, quality title insurance can shield you from a number of unforeseen hazards.
Worker Non-Payment Liens
Often called a Mechanic’s Lien, these are one of the more common liens to find on a property. They can be filed for the land, building, or real property itself, and ensure payment to contractors and construction workers in the event the property owner does not pay them. If the property owner doesn’t pay the workers, the property takes on the lien and it must be paid before the property can be sold.
This lien can prevent you from taking ownership of your new property, and if you didn’t know about it beforehand it can come as a nasty surprise. It can leave you in a legal hangup and on the hook for worker back-compensation. Luckily, the investigation process involved in acquiring title insurance can turn these up before you commit to the property, possibly saving you a lot of headaches.
Existing Land Liens
If the previous owner of the property incurred significant debt, they may have had a land lien placed on their property by a financial institution. These could have been for unpaid taxes or credit card debt, but the end result is the same. If you buy the property without the thorough investigation and documentation involved in a title insurance policy, you could find yourself inheriting the lien.
Save yourself the pain. Purchase title insurance so you can have a title examiner undertake the necessary steps to protect you and the property.
Unclear Property Boundaries
When you purchase land, a surveyor will produce documentation for the official boundaries of your property. Oftentimes, they use existing survey reports, and these can occasionally be erroneous or even fraudulent. That means you may run into conflict with neighboring property owners. For this reason, it’s best practice to pursue an independent survey to make sure you’re getting an accurate and fair assessment of your property boundaries.
In any case, if these issues appear and you have the backing of an experienced title company, they’ll use their expertise to help you settle the resulting dispute. They’ll also cover unexpected legal fees and support you through any additional complications. That means you can rest easy knowing your new home and property are protected.
Thinking About New Home Construction? You Need Title Insurance
Make no mistake, the expenses associated with a quality title insurance policy are a small price to pay for the peace of mind they’ll offer. Let us help protect your family and property from unexpected pitfalls on the road to building your new home. Clarion Title and its experienced title agents are ready to assist you today.
This material is provided as a courtesy and for educational purposes only. Please consult your title professional for specific information regarding your situation.