new-constructions

Phase 1: New Construction

 

New construction and building your new home to your choices and specifications can be a thrilling experience. There are a few items concerning new construction of which a homebuyer should be aware. Taxes are assessed on the land only until the building is completed and the occupancy inspection is issued. Usually the issuance of an occupancy certificate triggers this assessment. It can take many months for the tax collector to issue the tax bills. You as the homeowner will be assessed what is commonly known as an interim tax bill. This is a tax bill which will be issued retroactive to the issuance of the occupancy certificate. It will not be collected as part of your closing costs nor will it be a part of your lender’s escrow for taxes. You will be wholly responsible for this bill.

 

Another issue that is special to new construction is the potential for a mechanics’ lien on your property. The mechanics’ lien law is designed to protect contractors, subcontractors and parties that contract with subcontractors. In Pennsylvania, mechanics’ liens on new construction relate back to the date of visible commencement of construction, not the date the claim is filed. Therefore, it is possible for a mechanics’ lien claim to arise after closing. The claim must be filed six months after the completion of the project. Title insurance does not protect a buyer against mechanics’ liens because it occurs after the closing and issuance of the policy.