You purchased the perfect tract of land with the intentions of building your future dream home. At the time of your closing on this purchase you were issued an Owner policy of title insurance. Fast forward – you are now ready to build your dream home.
After talking with different builders, perfecting the house plans and spending what seems like life time picking out all of the paint colors, cabinets, light fixtures, flooring and everything else that is a must for your new home, you’re finally ready to start the next step. Once you have nailed down the financing for the dream home, your lender will contact the title company for your closing. The escrow officer will offer you a new Owner policy insuring the amount of your land together with the cost of the new home build. The choice is yours to surrender your current policy. However if you choose not to purchase the new policy, keep in mind you will be limited to the insured amount in the original policy if the need should arise to file a claim on said policy. In other words, the land only cost you $50,000 to purchase and your dream home is going to cost you $300,000 to build. The $300,000 will not be covered under the original policy which carries an insured amount of $50,000 for the land purchase price.
If you should choose to purchase the increased amount owner policy, you will be allowed a credit towards the premium fee for the new policy. The credit will equal the amount of the premium fee charged for the land policy.
If you have any questions about surrendering your policy when you’re ready to build your dream home, let us know we would love to answer any questions you have.
