Do you need title insurance if you are paying cash for a brand new home?

Title Insurance When Paying Cash

When paying cash for a new home, there are no regulatory laws that 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 the builder of your new home never paid off a mechanic's lien against the property and the lien wasn't filed until 2 pm the day of closing and your closing was scheduled at 3 pm?

It is now 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.

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.

It is a low cost, one-time fee insurance that is in effect for the lifetime of your ownership, whether you own the property for 1 year or 100.

Since real estate is typically the largest single investment a person makes in their lifetime, the benefits of having the insurance outweighs the cost of buying the policy.

Read on for more information from Wikianswers contributors:

• I had a recent experience with title insurance. I just bought a condo and paid for it cash. A month later I received a tax bill from the county where the property is located showing delinquint taxes on the property. The Settlement company must have insured that there are no delinquint taxes on the property before the closing, Title insurance companies should make sure there is nothing on lein since that is why they are paid. Turned out that previous owner's mortgage company did not direct the payments form the owner's escrow account to the property's taxes. If I had no title insurance, I would have been stuck between the settlemet, mortgage, and county hitting my head on the wall, but now I should make the title insurance company work for their money and figure out why the taxes were not paid.

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