Title insurance is recommended for a newly constructed home even though the home itself has no title history. Because your new home was built on unimproved land, there may have been many prior owners of the property and with those prior ownerships comes the uncertainty of a clear chain of title. Additionally, obligations to contractors who worked on the home construction may be outstanding, jeopardizing clear title to the property.
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. A Title Owner’s Policy offers the best protection from risk exposure 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.