When working with contractors to build out the home of your dreams, you might think that since it’s a brand new home being built with no prior owners that title insurance isn’t necessary. Unfortunately, this simply isn’t true. Construction of a newly built home has the potential to expose the homeowner to unique title pitfalls, usually surrounding the build of the home on land that has potentially had previous owners. As the homeowner, you can protect yourself from potential title threats that were undiscovered prior to settlement by purchasing title insurance.
What is Owner’s Title Insurance?
Owner’s title insurance is separate from an insurance policy issued by the lender. Owner’s title insurance protects the owner’s rights and property from future legal claims surrounding the property itself. In addition to protecting the owner’s rights, it protects the owner’s heirs for as long as the owner has a vested interest in the property. An owner’s policy protects the homeowner’s property rights, while a lender’s policy solely protects the lender. A purchase of owner’s title insurance typically costs about 0.5% of the purchase price of the home and is worth the peace of mind.
Separate Owners Title Insurance Protects the Homebuyer
When you’re building out a new home, you are required to have a title insurance policy approved by the mortgage lender. However, you need to make an investment in a separate owner’s title insurance if you want to protect yourself from any title threats that may be undiscovered prior to closing. Potential threats that may arise are existing liens on the land, property boundary lines, or builder’s failure to make payment to contractors.
Coverage Against Unknown Defects and Claims
Owner’s title insurance can protect you against undiscovered errors and unforeseen title claims. This includes any pending legal dilemmas against the property or builders, such as liens against the property itself. The land on which you build your home may also be unknowingly owned by an heir who is seeking to claim ownership, have forged documents, or have inconsistent paperwork surrounding property lines. A one-time purchase of this insurance can help provide additional protection for owners of newly built homes.
A Title Company You Can Trust: Colony Title
At Colony Title, we will help you through the process of getting your property’s title and help you avoid the pitfalls of hidden costs while you buy your home. We are also well trained in identifying any and all errors in public records and helping you resolve them. We specialize in real estate title insurance in both Maryland and Washington, D.C., and we will perform an expert title search, check through all past documentation, and examine records for any fraud or forgery. For more information on how we can get you into the home of your dreams, contact us online or give us a call at (410) 884-1160. To get more updates on housing markets and how to get into your home, follow us on Facebook, Twitter, and LinkedIn.