You finally found your dream property. It’s in a new development, and you were one of the first people to sign up and put your name on a lot. The property includes a new home to be built. It’s the first time this land has ever had a house on it!
You sit down with your realtor and make a short list of what you need to do. A high priority is getting your financing in order. Your realtor urges you to get the funding completed as soon as possible since, with money, things will happen! You assure your realtor you are headed to your lender’s office next and will keep everyone up to date.
Your lender explains all the loan details and goes over a final list of items they need to close on the loan. Title insurance is one of the items on the list, and you find this a bit confusing. Why do you need title insurance if your home is the first ever built on the lot? Your lender looks at you and says, I know this doesn’t make sense right now, but here is why you need owner’s new construction title insurance for your home with a trusted title insurance agency.
History of the Property
The history of a property is partly what title insurance protects you from. You don’t know what kind of relationships and contracts were once tied to this property and how they could affect your ownership down the road. The problem with thinking you are building a new home and therefore don’t need title insurance is that the two events don’t cancel each other out.
In a new home development, you insure yourself against the totality of the property before and after the subdivision was created. A title issue with the original land before it was subdivided would mean possible legal problems with all homeowners in the new subdivision. Without title insurance, you would be forced to sue the other party to clear up unresolved issues.
By adding owner title insurance to your new construction, you protect yourself by ensuring no existing problems with the title. In the industry, we call this a perfected title, meaning it has no outstanding issues and can be transferred to the new owner.
Human Error
No matter how perfect everything appears, history has shown us that there is always a risk of human error with anything that involves… humans. The incorrect spelling of a name listed on the deed can cause problems. Or perhaps the plot information was recorded incorrectly 40 years ago! These can all be human-caused issues that may affect your ownership and cost you money to resolve. Although your title company works very hard to ensure nothing like this occurs, it can happen, and that’s what title insurance is for.
Title Insurance Protects You and Your New Construction Title
Title insurance protects you and your property from errors that could impact your ownership. At the very least, having a title insurance policy in place will cover court costs and help resolve any imperfections with the title for as long as you own the property. A reasonable, one-time fee upfront provides decades of peace of mind when it comes to your title. Title insurance is an investment well worth the money for new or existing construction as well as good old bare land.
At Cortes & Hay, we have been helping clients with all aspects of new construction title insurance for over 50 years. There is little we haven’t encountered or don’t already know about property and titles in the New Jersey area. Please contact us today if you have any questions or want to start insuring your new home construction title.