New construction is potentially rife with issues that can delay a closing. Unlike existing home titles that carry a verified chain of title recorded over decades, new construction involves many elements, liabilities and descriptors that are newly created and must be verified or resolved.
Survey issues, mechanics liens, newly created legal descriptions, open permits and master construction loan releases can all muddle the closing on new construction. Here are some ways builders can tackle these issues head on to avoid delays.
What Are Some Common Survey Issues That Can Delay New Home Closings?
New construction incorporates new boundaries, easements, rights of way, shared driveways, and retaining walls, all of which run the risk of being incorrectly indicated on the initial design. Homebuilders can avert disaster at the closing table by securing a staking survey on an individual parcel as construction begins and ordering the final survey once the primary elements of the construction are established.
How Do Mechanics Liens and Unpaid Bills Affect the Closing?
Mechanics liens and unpaid construction bills represent a cloud on the title of a property and title insurance companies will be unable to provide a clean title policy until those issues are resolved. Builders must insist upon lien waivers for each payment period and obtain an unconditional final lien waiver to ensure the sale can move forward.
What Issues Can Arise with the Legal Description?
New lot numbers, new street names, even the house numbering system can be incorrectly detailed, spelled or recorded on a legal description and every detail should be checked carefully for accuracy.
Can Unapproved Building Permits or Code Violations Delay a Closing?
Nothing will stop the sale of a new construction home faster than building permit issues, since everyone on the deal will refuse to go forward, especially title underwriters, but lenders and home insurers will also deny approvals. Builders must have strict processes in place to ensure every “T” is crossed and every “I” is dotted when it comes to permits.
Master Construction Loan Releases
And finally, if a new home’s title is still incorporated as collateral under the construction loan, the sale cannot go forward. Builders must prepare well in advance of the closing to remove the parcel from the master mortgage, and ensure the documentation is properly recorded.
At Florida Agency Network, we are expert at helping builders navigate the closing process. Contact us today to learn how we can help you with your next transaction.
