Title Insurance

Old liens, unpaid taxes, easements, or a boundary dispute a prior owner left behind can all surface after you close on a home, and title insurance is what covers that ownership-history risk. It comes in two forms that protect two different parties. A lender's policy protects the bank's loan and is usually required to get a mortgage. An owner's policy is optional and protects the buyer's own money in the home. Both are typically a one-time cost paid at closing.

Lender's vs. owner's title insurance

The two policies are not interchangeable. The CFPB states that "lender's title insurance is usually required to get a mortgage loan," but that it "does not protect your investment in the home (your equity)." To protect your own stake, the CFPB advises buying an owner's policy, which "protects the homeowner if someone sues and says they have a claim against the home from before the homeowner purchased it." Buying both from the same provider usually lowers the total cost.

Why it matters on new construction

On a newly built home, the title risk that stands out is a mechanics lien. Under A.R.S. 33-981, a contractor, subcontractor, or supplier who is not paid for work on a home "shall have a lien" against the property. The CFPB names this exact risk: claims "from contractors who say they were not paid for work done on the home." An owner's title policy can defend against many such claims, which is why it is worth buying on a custom build even though it is optional.

How it is used in Arizona

In Arizona, title insurance is part of a normal home closing, alongside the deed and the loan. On a construction loan, the lender's policy is a closing condition. Owners add their own policy to guard their equity and pair it with diligent lien waivers to keep liens off the finished home. See our FAQ on whether you need title insurance on new construction .