First time buyers of new construction homes often wonder why there is an extra charge at the closing table for something called “Title Insurance.” Why would a brand new home, never lived in by anyone else, need title insurance? There are two primary reasons:
1. Although the home was never lived in, it was built on vacant land that may have had one, two, or twenty different owners over the years. The chain of title might not be clear, and title insurance protects you, the new homeowner, from any uncertainty that arises because of that. Once a policy has been accepted, you are insured against claims on the property by previous owners.
2. While the home was under construction, there may have been unfulfilled obligations to contractors who worked on the home. Unpaid bills during construction can turn up later as construction liens against the property. Title insurance protects new homeowners from having to pay those liens and ensures clear title.
Title insurance is different from other kinds of insurance because it protects the homeowner from pre-existing problems, problems that happened long before you sat down at the closing table. Car, home, and health insurance all exist to cover the possibility of hazards in the future.
Unless you are buying your new home with cash, you’ll see two kinds of title insurance on your settlement statement at closing: Lender’s Title Insurance and Owner’s Title Insurance. Banks typically require a lender’s policy to protect their interest during your mortgage period. But it only lasts that long – until you have paid the debt in full. An owner’s policy, however, protects the homeowner’s interest and lasts for as long as you (or your heirs) own the property.
Owner’s title insurance is optional, but highly recommended, and might turn out to be the best little investment you could make in your new home.
Peggy Slappey Properties, Inc. is a Metro Atlanta real estate brokerage celebrating 35 years of experience in real estate sales and marketing. From new home construction to resales, we can help you find the home of your dreams. To see our current listings, visit www.psponline.com and call us for expert advice at 770-271-5555. Keep up to date with the latest PSP events and offers by checking in on Facebook at https://www.facebook.com/peggyslappeyproperties and on Twitter at https://twitter.com/psponline.