Even newly constructed homes can have ownership problems, unpaid debts, or legal claims against the property. Title insurance helps protect homebuyers against certain problems that could threaten their ownership rights. 

What Is a Property Title?

A title represents your legal ownership rights to a property. Before closing, a title company examines public records to identify potential problems that could interfere with those rights. 

These may include unpaid property taxes, outstanding liens, recording errors, or claims from previous owners. 

Even if you’re buying a brand new home, the land beneath it has a history. Previous owners, contractors, or lenders may have claims that must be resolved before the sale is completed.

What Does Title Insurance Protect?

Unlike homeowner insurance, which covers certain future events such as fires or storms, title insurance generally protects against covered ownership problems that existed before the policy was issued. 

There are two main types: 

Owner’s Title Insurance: Protects the homebuyer’s ownership rights against covered title defects. Coverage generally continues for as long as the insured retains an ownership interest in the property. 

Lender’s Title Insurance: Protects the mortgage lender’s financial interest in the property. Most lenders require this coverage, but it does not protect the homeowner’s equity. 

Why New Homes Need Title Insurance

A newly built home isn’t necessarily free of title problems. 

For example, an unpaid contractor or supplier may have a valid lien against the property. Boundary disputes, recording errors, or unresolved claims involving the land can also create complications. 

A title examination helps identify problems before closing. Title insurance provides additional protection against covered defects discovered afterward. 

Do You Have a Say in Choosing the Title Company?

When buying a new home from a builder, the builder often recommends or arranges the title company handling the closing. However, homebuyers should ask to participate in choosing the title company before signing the purchase agreement. 

Federal law generally prohibits sellers from requiring buyers to purchase title insurance from a particular company as a condition of sale, although the details can depend on who pays for the policies. 

In Texas, title insurance premiums are regulated by the Texas Department of Insurance. Companies charge the same premium for equivalent coverage, although certain additional closing fees may vary. 

Therefore, choosing a title company shouldn’t be based solely on price. Experience, reputation, reliability, and customer service deserve serious consideration. 

An excellent example is Sierra Title Company, a trusted name serving the Rio Grande Valley since 1928. For almost 100 years, Sierra Title Company has offered the kind of longstanding local experience homebuyers should look for when selecting a title company. 

Protect Your Ownership Rights

Before closing, review your title commitment and ask about any liens, restrictions, easements, or exceptions. Understand what your owner’s policy covers and what it excludes. 

Your new home should come with more than a set of keys. It should come with confidence that your ownership rights are protected.