Will a Title Company Construction Escrow Help Protect Me?
A title company will insure that your new construction project will have all of the proper documentation and insurance throughout the construction process. Make sure your financial investment is insured and protected before, during and after the construction process.
Beware of a builder who pays directly from his/her checkbook. If everything goes right you will have nothing to worry about, but if it does not, you may be liable for liens against your property after completion.
There are approximately 360,000 components to a new custom home and any one of them can potentially cause an issue. Relying on a builder to provide the protections necessary is often a hit or miss proposition and does not allow for any impartial third party to oversee the flow of your money.
Many title companies in Illinois, and other states, offer construction escrow services that are virtually indispensible as a preventative measure against fraud and other malfeances. Remember, the goal is to arrive at the completion of your project with a lien free home. A title company can insure that you will have a free and clear project upon completion by establishing seamless procedures for paying bills throughout the construction process.
Builders often object to using a title company because they prefer to disperse your money themselves without conforming to the demands of the title company’s procedures.
Example: Mr. and Mrs Jones had a new home built and employed the escrow services of the title company. Their project went smoothly and was completed on time and within budget. Once they were moved in and a few weeks later, they received a letter of intent to lien from the concrete supplier. The concrete subcontractor that their builder hired was paid in full for labor and materials, but never paid the supplier for the concrete. The claim was for over twenty thousand dollars. Because the Jones’ used a title company for construction escrow and had a policy in force, the title company paid the bill and pursued the concrete contractor for reimbursement. If the customer paid them directly or if the builder had paid them, one of us would be in big trouble.
It doesn’t matter if your new home is built in Lake Bluff or the North Shore of Chicago, you should always engage with a builder familiar with the workings of construction escrows.
Kathcon Development demands the involvement of a title company for every new construction or custom home project, for our protection and yours.