How New Construction Homes Affect the Title Search

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Building a brand new home on an empty lot is like having a blank canvas to make all your own. So if you are the first one to live in your home, can you skip the title insurance?

Title Insurance helps protect you and your lender from certain risks that could be associated with the property. Since this typically applies to issues that are tied to a house, it may seem like there is no need for title insurance when there is not a pre-existing home.

However, even without a house, the empty property has its own history. Prior to construction, that land likely changed hands multiple times, so it has the potential for ownership issues just like an existing home. A title search will look for encumbrances like liens to determine the status of the property’s title.

One example is a mechanics lien, also referred to as a construction lien, which is a possible burden for a newly constructed home. A mechanics' lien is a way for construction workers, subcontractors and suppliers to ensure they are paid for their work when building a home. If a builder fails to pay these workers, they can place a lien on your property. These liens can be a hassle to remove down the road so make sure you are protected with a title policy from a trusted title company.