Buying a Newly Built Home? Why You Still Need a Title Search
Buying a newly built home can be exciting. Everything is new—from the roof and appliances to the flooring and fixtures. With no previous homeowner to worry about, it may seem like there shouldn’t be any old problems attached to the property.
But there’s an important distinction to remember:
The house may be brand new. The land underneath it isn’t.
That’s one reason a title search remains an important part of the closing process when purchasing new construction.
What Is a Title Search?
A title search is a review of public records related to a property and its ownership history. The goal is to identify potential issues that could affect a buyer’s ownership rights before the transaction is completed.
Even when you’re purchasing a newly constructed home, the property itself can have a history that stretches back decades—or considerably longer.
A title search can help uncover issues that need to be addressed before closing.
New Construction Can Still Have Liens
One issue that can arise with newly constructed properties involves liens.
Building a home may involve a general contractor, subcontractors, suppliers and other companies providing labor or materials. Depending on the circumstances and applicable law, unpaid amounts associated with construction can potentially result in liens or claims against the property.
A thorough title process can help identify recorded liens or other matters that may need to be resolved before ownership transfers to the buyer.
The Land Has an Ownership History
A new house doesn’t erase the history of the property it sits on.
The land may have changed ownership numerous times. It may previously have been part of a larger parcel, undergone subdivision, or been subject to agreements or restrictions established years earlier.
A title search examines the property’s records to help confirm the ownership history and identify recorded matters that could affect the new owner’s interest.
Easements and Restrictions Can Affect the Property
An easement generally gives another person, company or government entity certain rights to use a portion of a property.
For example, a utility company may have an easement allowing access to underground or overhead utilities.
There may also be recorded restrictions or covenants affecting how a property can be used.
These matters aren’t necessarily problems, but buyers should know about applicable recorded restrictions before completing their purchase.
Boundary and Recording Issues Can Surface
New construction often involves subdivisions, newly created lots and updated property descriptions.
Problems involving legal descriptions, recorded documents, boundaries or other property information can sometimes arise.
Identifying potential discrepancies before closing provides an opportunity for the appropriate parties to address them before the buyer takes ownership.
What About Property Taxes?
Taxes and assessments are another important consideration during a real estate transaction.
Depending on the property and timing of the transaction, there may be outstanding taxes, assessments or other recorded obligations that need to be addressed as part of the closing process.
The fact that the home itself is new doesn’t automatically mean the property’s financial history begins with the buyer.
Why Title Insurance Still Matters With a New Home
A title search is designed to identify potential title issues before closing, but certain problems may not be discovered through a standard examination of public records.
Depending on the terms, conditions and exclusions of a particular policy, owner’s title insurance can provide protection against certain covered title defects or claims that arise after the purchase.
New construction doesn’t eliminate the possibility of a title issue.
That’s why buyers should understand both the title search and title insurance portions of their transaction.
Don’t Confuse “New Home” With “New Property”
When you’re standing inside a brand-new kitchen or walking through a home that’s never been occupied, it’s easy to think everything about the property starts with you.
Legally, that’s rarely the case.
The land existed long before the new home was constructed, and its history can continue to affect the property today.
Working with an experienced title and closing company can help ensure that the property’s records are carefully reviewed and potential title matters are identified before closing.
Buying New Construction? Liberty Title & Escrow Can Help
Whether you’re purchasing an existing property or a newly constructed home, a smooth closing starts with knowing what’s behind the title.
Liberty Title & Escrow** works with buyers, sellers, real estate professionals and lenders to help make the closing process as clear and efficient as possible.
Before you get the keys to your brand-new home, make sure the title gets the attention it deserves.
Contact Liberty Title & Escrow to learn more about title services and your upcoming real estate closing.
