Home Buying in Austin>Question Details

Trulia Austin, Home Buyer in Austin, TX

If you're buying a new-build home with cash, do you still need to buy title insurance?

Asked by Trulia Austin, Austin, TX Fri Feb 1, 2013

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It is not required to buy lender's title insurance. However, I would suggest purchasing owner's title insurance to protect yourself.
0 votes Thank Flag Link Mon Feb 4, 2013
Great Question: One that I have been asked frequently over my career in Real Estate / Homebuilding.

The bottom line black and white answer is no. You do not have to purchase title insurance. There is not a title insurance company out there that would recommend that but it is not an absolute requirement.

I think it best depends on the specific buyer / builder situation and ultimately that buyers/builders level of risk adversity and of course their knowledge and understanding of real estate.

If the landowner has owned the building site / land for some time or perhaps inherited the tract and the tract has been held in the same family for generations then you probably have minimal risk exposure. However if the tract is a lot created by a developer or building company and the buyer/builder has little or no knowledge of the history of the land then probably the money is well spent for peace of mind.

The basic premise of insurance never changes: Where do you want the burden of risk exposure placed on yourself or someone else.

Stephen B. McClain, Broker Owner
Cornerstone New Home Solutions

512 876-3116
0 votes Thank Flag Link Mon Feb 4, 2013
Without a lender involved you will not be forced to buy title insurance. HOWEVER, if there was a failure of title to the property you would not be covered.

The builders often will not pay for title insurance so I'm presuming you are wondering if you really need to cover that expense. You want a policy because if there is a failure in title to the property you would be covered. If no title policy, no coverage and you could loose the house and land!

A title attorney told me recently that he has seen several cases of title failure recently. If it was me I would sleep better having a title policy.

Good Luck and enjoy your new home!

Claire McIntyre, Architect / Real Estate Broker / Builder
512 699 9912
MMI McIntyre Associates
Real Estate Brokerage
McIntyre & McIntyre Inc
Architecture / Engineering
Project Management
0 votes Thank Flag Link Sun Feb 3, 2013
Yes, title insurance will protect you against liens.
Web Reference: http://larapavanelli.com
0 votes Thank Flag Link Fri Feb 1, 2013
You are not required to obtain an owner's title policy, but you also don't have to purchase homeowner's insurance either if you don't have a vendor's lien on the property. Both types of insurance are designed to limit your financial losses and liabilities. The cost of an owner's policy is minimal and is typically paid for by the seller (at least in our region), and I can't think of any good reason not to have your home insured against title defects.
0 votes Thank Flag Link Fri Feb 1, 2013
Title insurance policy has nothing to do with how you pay for the house, cash or mortgage. In my opinion you don't need it especially when you buy a new house, but they may make you buy it anyway. The best way to solve the problem is to ask the builder to pay for it, they usually do. You probably don't have a Realtor because had you had one, you would have been better informed and most likely would have negotiated a better price for the house too.
0 votes Thank Flag Link Fri Feb 1, 2013
There's no rule that says you have to, but everyone does. In the event that someone came along and claimed an interest in your property you could have to defend yours in court and that could get expensive. Other issues include encroachments, liens and easements. Having it is a good idea.

You can also run into trouble getting financing, or selling if the next buyer can't get financing. Lenders want to see a clean chain of title and by breaking that you may be asking for trouble.

The custom in Texas is that the seller pays for the title insurance, so in a sense it doesn't come out of your pocket - it's just built into the price.

Feel free to contact me if you have other questions or would like help making a purchase.

Charlie McLagan, CNE, SFR
0 votes Thank Flag Link Fri Feb 1, 2013
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