Convenant & Insolvency indemnity at the last minute. How should i play it?

m_k_dons

Hi,

Firstly I know the answer will differ from person to person but I just want to get people's opinion on this.

My GF and I are within days of being able to exchange with completion aimed for the end of March. But today I got a letter from our solicitors saying that we were going to have to pay for Convenant & Insolvency indemnity insurance.

Covenant because someone is 1907 said they had to give permission for the houses to be built and as no one knows if it was done correctly we need to get insurance for it - £128. What a stupid rule though. It's over 100 years ago!

Insolvency because a couple of years ago one of the vendors put the other on the deeds. Now we have to get insurance against them going bankrupt! - £160.

+57.50 of convey fees.

It really bugs me about the insolvency one as they have refused initially to pay for it. Why should I have to pay just in case they go bankrupt?? SO ridiculous.

So, we're thinking we're going to tell them we're thinking about things for a couple of days. We don't really want to shell out this and find more surprises after this one. Do you think that after a bit of sweating they will pay up? Surely it's only fair? My GF does actually feel that we should probably pull out because of it. :mad:

poppysarah

Your GF doesn't want to buy the house if she's willing to throw it away for a couple of hundred quid.

You could ask them to pay the fees or pay half.

silvercar

Depends how much you want the house, how much money you have already spent that will be wasted if you don't pay the extra and whether emotionally you want to start all over again.

You could always decide not to go for the covenent insurance. If you are not buying at under value why do you need the insolvency insurance?

m_k_dons

poppysarah wrote: »

Your GF doesn't want to buy the house if she's willing to throw it away for a couple of hundred quid.

She's worried there might be more costs to pay a we get ourselves further through the process.

m_k_dons

silvercar wrote: »

Depends how much you want the house, how much money you have already spent that will be wasted if you don't pay the extra and whether emotionally you want to start all over again.

You could always decide not to go for the covenent insurance. If you are not buying at under value why do you need the insolvency insurance?

I'm not sure if convenant insurance is compulsary. Only got letter this evening so asking solicitor tomorrow.

I think insolvency in case the original owner game away equity cheaply and goes bankrupt in the next few years. Just annoyed we are paying to cover against something will might happen to them.

Sorry for the double reply, am posting from iPod and couldn't quote both. Thanks for the reply.

poppysarah

I assume you mean iphone. A phone which costs more than the fees you're worrying about.

Ask the solic if they're really needed. Ask the solic what other fees might turn up.
Work out as a % of the price you're paying how much they are.

m_k_dons

iPod touch over wifi :-p and I get your point. Was just wondering if other had come across the same.

Thanks for the replies, I'll get onto the sols tomorrow.

poppysarah

Let us know what they say.

Richard_Webster

If the covenant was imposed in 1907 and the house built round about then and not extended or altered within the last 20 years so as to breach the covenant then your solicitors are talking nonsense. Tell them after 20 years such breaches are immune from any enforcement - (Hepworth v. Pickles [1900] 1 Ch. 108.). They should know that!

In any event if such a policy is needed the sellers should pay for it. (Of course if you do any work that breaches the covenants then you may have to pay for a further policy when you sell.)

As far as an insolvency indemnity is concerned it is the sellers who did the not for value/undervalue transfer and therefore it is down to them to pay for an indemnity policy. In the present market there's no earthly reason why a buyer should pay for this, but it will be needed. Your solicitors should be trying to get the sellers to pay for any policies that are needed and a bit of pressure via the estate agents on the seller normally should do the trick.

m_k_dons

Richard_Webster wrote: »

If the covenant was imposed in 1907 and the house built round about then and not extended or altered within the last 20 years so as to breach the covenant then your solicitors are talking nonsense. Tell them after 20 years such breaches are immune from any enforcement - (Hepworth v. Pickles [1900] 1 Ch. 108.). They should know that!

In any event if such a policy is needed the sellers should pay for it. (Of course if you do any work that breaches the covenants then you may have to pay for a further policy when you sell.)

As far as an insolvency indemnity is concerned it is the sellers who did the not for value/undervalue transfer and therefore it is down to them to pay for an indemnity policy. In the present market there's no earthly reason why a buyer should pay for this, but it will be needed. Your solicitors should be trying to get the sellers to pay for any policies that are needed and a bit of pressure via the estate agents on the seller normally should do the trick.

Thanks for the advice.

The house is only 15 years old so would that mean that the convenant insurance is needed?

I agree with the fact they should pay, it is they who are getting the first time buyer buying their house. I have told the other EA in the chain we are holding off exchanging until it is resolved and telling ours when he gets off the phone so hopefully they'll make them see the light.

Richard_Webster

The house is only 15 years old so would that mean that the convenant insurance is needed?

Yes!

The solicitors who acted for the sellers when they bought should have sorted this out for them. If the house is only 15 years old then when it was first sold the builder's solicitors should have supplied a policy. Unfortunately now that "deeds" are no longer kept by mortgage lenders this is precisely the kind of document that could have been lost over that time as the house changed hands or got remortgaged.

Such policies are normally perpetual but often have to be upgraded as to value, so if the house is being bought for more than the sellers bought for, an endorsement on the policy would be needed. In some cases it is now cheaper to buy a whole new policy than muck around with an endorsement. If there was no policy when they should be taking the matter up with the solicitors who acted for them at that time.