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Title Insurance On New Construction
Im curious as to other's thoughts on whether I should purchase title insurance on a new construction property. @Rich Baer what do you think?
Absolutely
Russell, happy New Year to you. If you are really seeking to shave a few dollars off of your settlement costs by avoiding the purchase of title insurance, I would consider its location. If it is in a well established subdivision and you are buying from a seller/builder who has sold many lots from it you should be OK. If this is something other than that situation I would buy it. I am assuming you will be living there. If you are not living there I would buy it as there could be an unreleased Builder mortgage that could hold up your resale.
New construction carries many of the same risks as older construction.
Who is to say that the former landowner didn't have a signed and notarized agreement with Billy Bob's grandpa saying that Billy Bob and all of his descendants have permanent irrevocable cow grazing rights over the land that all these houses are now on? Maybe this deed restriction was overlooked because it was never recorded at the county, but that agreement was 100% real, notarized, there is zero doubt as to its authenticity, etc.
Are Billy Bob and the herd of cows he shows up to your front yard with, while waving a piece of paper, clearly legal trolls? Yup, I think so.
Would the homeowner(s) and developer win in court after a bunch of legal fees? Yup, perhaps they would.
Would it be easier to simply have title insured so you can file it away in the "not my problem" basket? I'd say so.
(Yes, I picked a funny example. A less funny one might be mineral rights. Or a long-forgotten easement from the 19th century when the West was being settled that 1 out of 48 plots of land must be reserved for public schools.)
Originally posted by @Rich Baer:
Russell, happy New Year to you. If you are really seeking to shave a few dollars off of your settlement costs by avoiding the purchase of title insurance, I would consider its location. If it is in a well established subdivision and you are buying from a seller/builder who has sold many lots from it you should be OK. If this is something other than that situation I would buy it. I am assuming you will be living there. If you are not living there I would buy it as there could be an unreleased Builder mortgage that could hold up your resale.
Yes owner occupant. Builder Calatlantic/Ryland at Downtown Crown. Hard to see any title issues coming up. As someone who generally recommends title insurance it feels unnatural not to get it, but then I'm thinking a title problem is so unlikely in this instance, at least to the extent that it would take an attorney more than 4 billable hours to fix.
Under the circumstances you present, I would have the same thoughts about not paying for it. If many units have already been sold odds are strongly in your favor as you know.
I second the ABSOLUTELY!