Congratulations! You have decided to build a new house! A legitimate question is why would you need a title company involved in that process and especially, why would you need a title insurance on your brand-new house that no one has owned before you? Doesn’t it seem counterintuitive? The answer is you do need a title insurance and here is why.
Throughout the construction process of your new home, significant amount of work is being subcontracted to specialty trades such as roofers, painters, electricians, plumbers and so on. As you pay your progress payment to the builder, the builder is supposed to pay his progress payment to the subcontractors. But what happens if he does not? Florida law enables unpaid subcontractors to file a lien against your property. Even if you paid your builder, you, the property owner, may still owe payment to subcontractors and you can end up paying twice. What makes it even worse, subcontractor’s claim for payment is secured by your property. Title company can help you to avoid this situation by providing title search and requesting lien releases from subcontractors prior to you releasing your progress payment to the builder. You should never pay twice for the same work!
If you have a lender providing you with a construction loan, your lender will always involve a title company to search for liens before releasing a progress payment. If you do not have a construction loan and paying cash to build your home, you should protect yourself by letting us protect you.
The right time to buy your title insurance is when your house is completed and you are taking possession of your home. Although your home is new, the lot it is constructed on is not, and may have undiscovered claims from third parties. There could be errors in recording that could lead to unsearchable back loans, mechanic liens or other claims. Title problems are rare, but if they happen, they can have very, very costly consequences. This is why you should get an owner’s title policy and feel confident that if something terrible ever occurs, that policy will pay for attorney, for court costs and, most importantly, for back loans and liens if they are legitimate. The title insurance company will handle the entire issue without having to charge you anything once you’ve paid that initial premium. It is a small price to pay to protect yourself from threatening title claims and to peacefully enjoy the ownership of your newly built home!