It’s clear that title insurance is crucial when purchasing a pre-owned home, but buyers often wonder whether new homes need title insurance. While a new home purchase isn’t at risk of facing a claim from a missing heir or conflicting will, there are still a number of issues that could arise that make investing in title insurance a must.
Do New Homes Need Title Insurance?
Title problems with newly constructed homes often involve legal ownership of the property on which the home is constructed. Claims may also arise as the result of contractors who are not properly paid for building the home.
While the home you’re buying is new, the land it’s being built on is not, so it is possible for a third party to make a claim on the property. The first owner of a home can actually be more at risk for title defects simply because it’s the first time the title has been reviewed since the land was originally purchased. If a piece of land is owned by multiple family members, for example, the land could have been sold to the developer without the permission of all of the owners, and that owner could file a claim.
When purchasing a new home in a brand new subdivision, it’s critical to make sure that the land was properly subdivided and that the home you purchased is located on the correctly identified lot within the subdivision to ensure that there is no question of ownership in the future.
With title insurance, lenders and buyers are protected against claims. Most mortgage lenders require the purchase of a lender’s policy even when someone is purchasing a brand new home. The lender’s policy does not protect the buyer, though, so we recommend investing in a separate owner’s title policy to protect yourself.
A good insurance company will protect you from financial loss if there is a claim or defect involving your title. To learn more about how Shore Title can protect your investment in a new home, call 609-263-7472 today.