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Indemnity policies, are they any use?.
itsgototstop
Posts: 372 Forumite
Hi All,
From reading these threads it seems alot of people have received indemnity policies when buying property for lack of PP or buildings regs etc (I had one too).
If the council cannot enforce lack of PP after 4 years in use and buildings regs a year old what are the use of these policies?.
Am I getting the wrong end of the stick or are they just peace of mind for the lender?.
Any knowledgeable folk out there.....
From reading these threads it seems alot of people have received indemnity policies when buying property for lack of PP or buildings regs etc (I had one too).
If the council cannot enforce lack of PP after 4 years in use and buildings regs a year old what are the use of these policies?.
Am I getting the wrong end of the stick or are they just peace of mind for the lender?.
Any knowledgeable folk out there.....
0
Comments
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Peace of mind for the buyer, buyer's solicitor, buyer's lender.
By the time you get to discussing indemnities, people will have vested time and money in the sale and paying a couple of hundred quid to dot the i's and cross the t's is just something that seems to happen.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
You can sometimes get a Planning Indemnity for work that is less than 4 years old - so that would be worth having.
The Building Regs point all flows from the Cottingham case in 2000. In practical terms Councils don't enforce after 12 months because that is the time limit on the relatively straightforward method for them to do this.
In theory they could go the Civil Courts for an injunction to have the work removed and the property reinstated to its former condition. I haven't actually heard of a Council doing this. It seems that the judge in the Cottingham case took into account the possibility of this, and found some solicitors negligent for not checking whether some fairly old works had the right approvals, on the basis it was part of a solicitor's duty to warn clients about possible liabilities.
Most people thought the case was wrongly decided, but we are stuck with it. It seems nobody told the judge that civil injunctions never happened in practice. Lenders have taken this seriously and most of them in the latest version of the CML Lenders' handbook want solicitors to check Building Regulation points going back forever. There is no logic in this at all.
However, a letter to a lender pointing out the stupidity of the whole business in a particualr case would get lost in the lender's internal bureaucracy, and after a delay of a month or more (while all parties in the chain are fuming) might produce the result that the surveyor thinks that the seller should apply for a Regularisation certificate which would involve getting the Building Inspector in and having plaster stripped off etc so they can check compliance. Neither seller nor buyer would want this and nobody would want the delay so people resign themselves to taking out an indemnity policy.
If there is anyone out there in high authority in a major lender's organisation, perhaps they could explain why we have to waste our time on this nonsense.
(Of course if there are no Building Regs the buyer has to take the chance there might be a problem structurally, but that is a separate issue and as hopefully most people looking at this forum will know, a policy does not provide any cover if there is structural failure, but only if enforcement action is taken.)RICHARD WEBSTER
As a retired conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability for it.0 -
Richard_Webster wrote: »You can sometimes get a Planning Indemnity for work that is less than 4 years old - so that would be worth having.
The Building Regs point all flows from the Cottingham case in 2000. In practical terms Councils don't enforce after 12 months because that is the time limit on the relatively straightforward method for them to do this.
In theory they could go the Civil Courts for an injunction to have the work removed and the property reinstated to its former condition. I haven't actually heard of a Council doing this. It seems that the judge in the Cottingham case took into account the possibility of this, and found some solicitors negligent for not checking whether some fairly old works had the right approvals, on the basis it was part of a solicitor's duty to warn clients about possible liabilities.
Most people thought the case was wrongly decided, but we are stuck with it. It seems nobody told the judge that civil injunctions never happened in practice. Lenders have taken this seriously and most of them in the latest version of the CML Lenders' handbook want solicitors to check Building Regulation points going back forever. There is no logic in this at all.
However, a letter to a lender pointing out the stupidity of the whole business in a particualr case would get lost in the lender's internal bureaucracy, and after a delay of a month or more (while all parties in the chain are fuming) might produce the result that the surveyor thinks that the seller should apply for a Regularisation certificate which would involve getting the Building Inspector in and having plaster stripped off etc so they can check compliance. Neither seller nor buyer would want this and nobody would want the delay so people resign themselves to taking out an indemnity policy.
If there is anyone out there in high authority in a major lender's organisation, perhaps they could explain why we have to waste our time on this nonsense.
(Of course if there are no Building Regs the buyer has to take the chance there might be a problem structurally, but that is a separate issue and as hopefully most people looking at this forum will know, a policy does not provide any cover if there is structural failure, but only if enforcement action is taken.)
Thats really interesting, thank you for that, understand the reasoning behind it now...( you are indeed knowledgeable folk:T )0 -
I am in the final stage of buying and selling a house. Due to exchance on the 27th, however at the last hour the purchasers solicitors are requesting an indemnity policy on my boiler.
I bought my house from new in 2002 and therefore a boiler was installed by the builders. I received a series of documents, but not installation certificate.
The solicitors are requesting a copy of this certificate, and as i have never owned such a document they are asking for an indemnity policy for £94.
I have rejected saying it is ridiculous.
DO i HAVE to get one? or is it down to the purchaser to decide?
Re: certificate, is there some new law that requires me to have one?0 -
Trick asksDO i HAVE to get one?
Well, if you want to exchange on 27th, yes. If you want to find another buyer who won't care (could be "tricky" to find one..), no.
Cheers!
Lodger0 -
Regulations requiring an installation certificate came in in April 2005; before then it wasn't required.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0
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We have purchased a house with indeminity policy of covering lack of corgi, since gaining keys we have had the gas serviced and it has been turned off due to being immediatly dangerous on at least 3 points- despite the seller ticking box to say gas in full working order. also seller said that gas was serviced 12 months ago, but couldn't find paperwork- we have since found out that this was serviced by a non 'corgi/ gas safe' engineer and there was never any paperwork as such. Do we have any legal comback for help with sorting? Thanks0
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