Author Archives: Jennifer Cassels

7 Tips on selecting the right custom homebuilder

In today’s day and age, building a custom home is like fine tuning an engine.  It takes great precision, focus and creativity to ensure the final product is exemplary.  That is why it is so important to do your research before deciding on which builder to choose with this life changing purchase.

Custom Home by American Dream Properties

Custom Home by
American Dream Properties

Here are 7 tips to selecting a builder with confidence

  1. Avoid builders with no office.  In most cases, that means they work out of their car which can signify organizational problems and several other issues.
  2. Meet your builder in person. Before starting work on any new home, it is important to meet with your builder.  Building trust from the onset will help you throughout the entire process of construction.  Experienced builders encourage their clients to visit the site. I have seen many times where clients only visit the site once a month.   I encourage my clients to come once a week. Many things can change from week to week. It is important to pay attention to your investment.
  3. Ask the builder to show you completed homes. Don’t be shy to knock on the doors of the homeowners; past customers will always tell you the truth.
  4. Keep an eye on quality. Homes often look good from afar but when one takes a closer look several flaws can be exposed.  I suggest walking around a house and looking for things like cracks or separations in the foundation.  Also, it is important to pay particular attention to the material used. Items like Vinyl siding, A/C condensers and windows are very telling of the quality of the overall home.
  5. Inquire about the foundation. Although a home built with a convention block foundation is acceptable, a home built with a solid poured foundation is preferable.
  6. Ask about upgrades. Builders typically have a set of standard selections and are reluctant to allow customers to upgrade.  As a customer, you should always be able to make upgrade selections even if this means slight delays in construction.   Reluctance on the builder’s part is a sign of poor customer service.  Good builders know that the simplest changes can bring tremendous satisfaction and appreciation from their clients.
  7. Secure your deposit-During contract negotiations, it is important to secure your deposit with either a personal guarantee from the builder or have it secured in an escrow account. Most builders are not comfortable with this which could signify their own financial limitations.  Ask this question when you’re interviewing potential builders.

What is the difference between the Owner’s Policy and the Lender’s Policy of Title Insurance? Do I have to pay twice?

The most common forms of title insurance are the owner and lender title insurance policies.  The major differences that exist between them is the fact  that the owner’s policy protects the owner of the premises and the lender’s policy protects the mortgage lender.  Loan policies are generally paid for by the borrower but they insure the lender only.  Both the owner’s and lender’s title insurance policies insure against much of the same risk but the loan policy contains additional protections that are designed to address risks associated with the lender’s mortgage lien on the premises.

Now if a lender’s policy has more protections for its insured(the lender) than an owner’s policy does for its insured(the owner), then two questions come to mind.  One: Why is the lender’s policy cheaper to purchase than an owner’s policy? Two: Why is an underwriter sometimes more willing to omit an exception from a lender’s policy versus an owner’s policy?  To put it simply, an insured under a lender’s title insurance policy is less likely to actually suffer a loss than is an insured under an owner’s title insurance policy.  This is because while both title insurance policies would require that there be a title defect which would result in a claim, the lender will only suffer an insured loss if, after foreclosure, the value of the property was less than the outstanding indebtedness on the mortgage loan.

When you purchase both lender’s title insurance for the lender and owner’s title insurance for yourself, you are not paying ”twice”, but you are paying somewhat more.  The New Jersey Land Title Insurance Rating Bureau has approved rates specifically for this “simultaneous” situation where both an owner’s and lender’s policy will be issued at the same time.  There is a special rate of a flat $25 for the lender’s policy when the borrower purchases an owner’s title insurance policy.  The same title is being researched and the same risks are being insured but there is an additional insured party.  That is the rationale that is applied when setting the rate.

What is a title search vs. title insurance?

ImageThere is a big difference between a title search and a policy of title insurance. Both products should (hopefully) disclose an accurate picture of the state of title. However, should there be an error or omission in the search, only one of these products provides immediate recourse and assistance under a title guarantee. Under a title insurance policy’s “duty to defend”, if an insured’s title is challenged the title insurer has a duty to pay for legal expenses involved in defending the insured’s title. Purchasing a title search, on the other hand, is really just the purchasing of the services of a title examiner to go out to the courthouse and report back with information. The information retrieved is usually much of the same information that a title insurance agent would use in the course of conducting its due diligence in preparation for issuing a title insurance policy. The biggest difference in this regard then is that by purchasing title insurance, you have not only ascertained the state of your title, but you also have an insurance policy that guarantees that status to you. This insurance policy carries with it not just a contractual assurance of title but it also provides immediate recourse to the claims department resources of a title insurance company. If you are a homeowner who has purchased title insurance and you discover that a lien is encumbering your property that was not disclosed, and by extension, not excepted from the coverage of your title insurance policy, you can simply notify your title insurer of the title claim and the insurer will handle it from there. If the matter does indeed amount to a title claim, the title insurer will assign an approved, vetted attorney with the relevant experience to defend your title. It is for these reasons that when you buy a home, institutional lenders require title insurance to guaranty the priority of their mortgage in the chain of title. To investors who may purchase the mortgage after you close on your home, it is very important that those mortgages be properly secured and for the lender to have recourse to an identifiable company that is regulated and that has been required to pay a portion of its revenue into a claims reserve. These protections are not part of a simple title search.

Title and Divorce

During the course of a divorce, even an amicable one, the state of  title to your real estate may not be the first thing on your mind.  There are many things to consider during a divorce but this is one area that really should not be overlooked.  Here’s why…

Although you and your spouse are surely looking at how to equitably divide the marital assets and debts, your real estate could blur the line between them.  Suppose, for instance, that your home is titled in you and your spouse’s name.  Judgments, mechanic’s liens, fines etc. owed  by one spouse can encumber jointly owned real estate.  Ordering a title search or instructing your attorney to do so will give you the information you need as to the status of your title.   Yes, it is an additional expense but it will save you a lot of  money in the long run.   Any title problems that arise can be addressed and resolved before your divorce is finalized so there are no surprises afterwards.

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