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Jeff Otto
Jeff Otto is Branch Manager of Lawyers Title Insurance Corporation which is a member of LandAmerica Financial Group, Inc., a premier national provider of title insurance and settlement services. Lawyers Title has been in the local marketplace since 1955. Jeff has been with Lawyers Title for 34 years, the last 24 right here in Wichita. You may contact Jeff at (316) 682-9600 x 201 or by e-mail at jotto@landam.com
Real Estate
2004-12-01 09:19:00
Title insurance for a new home?
: "I am buying a new home from a major builder. If I pay cash for this home, built in a new subdivision that has been surveyed, and there are homes on both sides of my home, why would I need to buy title insurance? If I am willing to take the risk, and there is no lender that requires title insurance protection, then why should I purchase title insurance? Is it a state law that I buy this insurance?"                                       
ANSWER: When paying cash for a new home, there are no regulatory laws providing that you MUST purchase Owner's Title Insurance. However, an Owner's Policy protects you against the acts of previous owners, mortgages, judgments, etc. filed of public record. What if one or more sub-contractors were not paid by the builder for their work, and, unbeknownst to you, these subcontractors later filed liens against your new home?  Said liens would then have to be paid off by you before you could ever sell the property. Or perhaps the builder of your new home never paid off a mechanic's lien against the property and the lien wasn't filed until 1:30 pm the day of closing and your closing was scheduled at 2 pm? It is now a lien of record, but may not have been included in the original property search or rundown. The lien goes with the property, not the previous owner. If the builder refused to pay the lien amount after the closing took place, you would have to either sue the builder (costly) or pay the lien and then sue the builder.  In either case, there is possible time, brain damage, and money out of your pocket to pursue this builder. And until the problem is resolved, you've got a serious problem.There are also many opportunities, during the releasing of lots that is on-going to builders as a sub-division is being developed, for errors to occur in the title work. If you had an Owner's Policy, the title insurance company would be required to defend the claim in court, all for the one-time fee you paid for the policy.Title Insurance is a low cost, one-time fee type of insurance that is in effect for the lifetime of your ownership, whether you own the property for just a short time or a hundred years! Since real estate is typically the largest single investment a person makes in their lifetime, the benefits of having the title insurance definitely outweighs the cost of buying the policy. The peace of mind you'll enjoy is well worth the price of the insurance. Just ask anyone who's ever had something come up on the title as a lien, cloud, or encumbrance after they've closed. They'll tell you they wouldn't think of not buying a title insurance policy when buying real property. More next month…
 
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