Why New Homes Need Title Protection

You have worked for years to save and save to build the home of your dreams. Hours and hours at the kitchen table drawing up “blueprints” of your perfect floor plan and flipping through magazines for landscaping ideas. And then, in the middle of construction, you learn that someone you’ve never met is claiming that they actually own your lot where your new home is being built.

Title issues with newly constructed homes most often involve claims of legal ownership of the property on which the new home is being constructed. Even though your newly-constructed home is new, the land has been there since title records were first kept and it is possible that some other person or organization may claim that they actually own the property.

As the first owner of this newly-constructed home, you can actually be at greater risk for a title defect because the title examination conducted as part of your construction project could be the first review for title defects in years. Especially if the land was being held for development and has sat empty for a long time.

Likewise, when purchasing a new home in a brand new subdivision, it’s extremely important to make sure that the land was properly subdivided and that your home is located on the correct lot within the subdivision to ensure that there is no question of ownership in the future.

Lenders and buyers (especially when they are building a new home) can be protected against claims with title insurance. Most mortgage lenders require the purchase of a lender’s policy even if you are purchasing a lot to build or are buying a brand new, already-constructed home. The lender’s policy does not protect the buyer, though, so it is important to consider purchasing your own separate owner’s title policy to protect your investment against potential future claims.

If you are in the market to build a new home or are purchasing a newly-constructed home, contact our title agents at 937-552-7050 for more information.