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April 24, 2024

What is Title Insurance? Do I need Title Insurance for New Construction?

Read further as we answer some common questions about Title Insurance for New Construction Homes. Thank you to our partners at Capstone Land Transfer for their wisdom on this topic! 


Title Insurance Explained

Title insurance protects the marketability of your home. So, if you go to sell your house tomorrow, you can sell it to another person and know that there are no judgments or prior owner mortgages on the property that you would be held responsible for.


Are there any differences in title transfers from a new construction home versus a resale home? 

There are a few differences between resale and new construction. There are the same risks, though, involved. So, we (the title company) are still searching for the property when doing a new construction transfer. We are still ensuring no prior owner judgments or liens come up on the property. With any property, even though you are buying a new construction home, the land has been transferred multiple times, usually multiple times in the past couple of years. We ensure that all those judgments or old title issues are handled and give you clear and marketable titles. 


How are taxes different for a new construction home?

When you buy a new construction home, taxes are only on the land at that time. After settlement, we record the deed in the courthouse, and that's how the tax assessor knows when to come out and reassess your home, land, and home together. Once they do that, you'll get a reassessment in the mail, followed by some interim tax bills. They are from the day of settlement to the end of the tax billing period. They are for the home portion of the tax bill only, as the builder has already paid for the land most of the time. Those interim tax bills aren't included in your escrow account, so you must pay them out of pocket. So, coming into new construction, you have to be aware that you might have an extra two to $3,000 in tax bills that must be paid out of pocket after settlement.


What fees are involved with Title Insurance? 

The Pennsylvania Department of Insurance sets title insurance fees. You pay a one-time fee. You can get two policies: an owner's policy that covers you as an owner and a lender's policy that covers the lender. Most lenders require the lender's policy, while the owner's policy is optional.



Kelly & Megan
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