Why New Homes Need Title Insurance

When you buy something “new” you often experience the feeling of security that nothing is wrong with it. It’s fresh, it’s just off the assembly block—you can feel confident in the quality, right? Well, most of the time. But not when it comes to the big purchases. If you get a vehicle, you automatically get insurance. It’s required by law. If you buy a really nice new computer you might purchase an anti-virus software to keep it safe and from crashing. So, what about when you buy a new house? No one’s ever lived in it, the title is fresh, clean, and certainly shouldn’t need any protection from the buying process, right? WRONG. Here’s some insights on why new homes need title insurance.

Title insurance is recommended for a newly constructed home even though the home itself has no title history. Here’s why:

• There may be many prior owners of the property your home was built on and with those prior ownerships comes the uncertainty of a clear chain of title.
• Contractors who worked on the home construction may have unfinished business dealings. This can influence the title transfer process.
• Unlike home insurance and car insurance, which focus on possible future hazards, title insurance safeguards against loss from hazards and defects already existing in the past.

At Velocity Title, we want all our clients to have the peace of mind and protection against potential risks associated with the purchase of a new home. When a new home is financed, lenders almost always require that a lender’s policy of title insurance be purchased, which protects the lender. This coverage does not offer protection for your investment. Only an Owner’s Policy helps protect your interests. In fact, a bank’s loan policy only covers the amount of the mortgage and only lasts until that debt is settled. An Owner’s Policy offers you protection for as long as you or your heirs have an interest in the property.

What is title insurance and what if it’s not for a new home?

We often get asked about what title insurance is. Like other insurance products, title insurance protects against the unknown. However, unlike other insurance products, it’s only a one-time purchase and it only protects against the undiscovered events in the past. The bottom-line is title insurance is extremely important for every real estate owner. It protects owners against errors, unresolved disputes, omissions, undiscovered liens, etc., that may have occurred in the chain of title as it passed from one owner to the next. Title insurance protects against a nearly endless number of possibilities, including:

1. Forgery and impersonation
2. Improperly recorded deeds
3. Erroneous or inaccurate legal descriptions
4. An unknown forced removal of a structure because your property: a) extends on another property and/or easement b) violates a restriction in Schedule B c) violates an existing zoning law
5. Not being able to build on the land for a Single-Family Residence because it violates a restriction in Schedule B or a zoning ordinance
6. There is an unrecorded lien by a homeowners’ association
7. There are unrecorded easements
8. There are building permit violations
9. And much more

To receive a full list of how title insurance safeguards your investment, and why you or your clients should use it, contact Velocity Title today. As experts in title search and problem identification, we will research the records of your property to ensure there are no ownership issues. Our first step is searching public records to determine the status of ownership. Then, our trained underwriters will determine the insurability of the title. Velocity Title will keep you and your real estate partners in the loop on all progression of your title search.

Protect Your Biggest Investment

When it comes to protecting one of the biggest investments of your life, you don’t want to look the other way. Be sure to get an owner’s title insurance or standard policy so you can rest assured you won’t have to deal with any unexpected issues that could come in the way of the next chapter of your life. Velocity has provided title insurance protection to over 250,000 investments. See what we can do for you or your clients here.