Indemnity Policy, Unadopted Road

horny_kez

Hi,
I am currently in the process of purchasing a house, the development was completed in 2006 but the road has still not been adopted by the council.
My solicitor asked the vendors to bare the cost of an insolvency act indemnity policy and provide a statutory declaration declaring their solvency which they have declined to do.
I have told my solicitor I am prepared to continue without this, do you think I have done the right thing? Anyone else had experience of this? I have searched the forums but most indemnity policies seem to regard building regs.
Thanks in advance.

poppysarah

You're ignoring your solicitors advice?

horny_kez

I wouldn't say I'm ignoring her advice, I'm going to let her know in writing tomorrow but told her by email to continue because she isn't the fastest solicitor in the world! Our offer was accepted on 1st September so I just want things sorted as it's already been 4 months!
I am asking if you think I need this policy?
I don't see that an unadopted road would affect the value of a house too much as a £500 redemption incase of repairs has already been paid.

poppysarah

Until it's adopted are residents liable for all repairs on roads, drains, streetlighting etc? What if you got stuck with a 40k road repair bill?

Speak to her and ask her what the indemnity covers you for. Ask her if she thinks it's essential. The seller should pay for it. If they don't it could be because they don't want to waste 500 quid or they can't get one because there's a massive bill for road repairs waiting to bite the new owner on the bot.

horny_kez

Also I did ask the council why it hasn't yet been adopted & they said all the works are now complete and the site is
supported by a Bond that is set against the Section 220 Notice for the site.

Anyone know what the Section 220 means?

silvercar

You could always pay for the indemnity policy yourself.

Ilian2008

Hello, why an Insolvency Act Indemnity policy? isnt the whole point of a Bond so that in the event of the developer becoming insolvent the bond can be drawn on to complete the works?

Pitlanepiglet

Are you taking a mortgage? I doubt that your mortgage company will allow you to continue unless the title is clear and your solicitor will have to report to your lender.

MenstrieBen

The road bond is to cover the cost of bringing the road up to adoptable standard should the developer fail to do this either through becoming insolvent or other possible problems.

Your best starting point would be to contact the councils development control section and ask about the status of the road - not all roads will be adopted and some are always intended to remain private (parking courtyards, or shared surface areas for some councils, as examples)

it is normal for the road to remain the responsibility of the developer for 1-2 years before beinf adopted as it allows time for any defects from the construction to appear - I would expect that is the road was being adopted that it woull be happening some time soon.

poppysarah

Sometimes longer than 1-2 years. I know someone who lived on a tiny road that was still not adopted after 7 years and that caused problems when there was a drains problem as it was the sole responsibility of the householders on the street.

Richard_Webster

Hello, why an Insolvency Act Indemnity policy? isnt the whole point of a Bond so that in the event of the developer becoming insolvent the bond can be drawn on to complete the works?

Quite!

If there is a bond it looks as if the cost of the road charges should be covered and therefore that shouldn't really be the issue.

An Insolvency Act Indemnity is needed when the buyer is buying the property for obviously less than the market value and there is the theoretical possibility that the seller could subsequently go bankrupt and his creditors might then allege that the proeprty was partially given away to defraud them. In those circumstances the transaction could be set aside - which is not nice for a buyer or his mortgage lender. An Insolvency policy pays out if this happens!

Possibly OP is confusing the issue over the road with another point about his seller?