Lending on a property with CONFIRMED chancel repair liability

ems11

I am due to exchange contracts on a property in the next couple of weeks, and my solicitor has just informed me that the chancel report (not the check) came back as positive on the property, and therefore it now has a CONFIRMED chancel repair liability against it. (not currently on title deeds as current owners have no idea its liable, as they bought it from new 15 years ago)

I understand that should I go ahead with the purchase, this will now have
to be stated on the title deeds.:mad:
I have also been doing some digging, and know I can get an insurance policy to cover the liability (albeit a realatively expensive one compared to a policy which covers me if it had a potential liabillity, rather than confirmed liability), however I have been doing some searching on the threads and see that a couple of people have actually been refused a mortgage on a property with either potential or confirmed chancel repair liability.

My question is this, has anyone recently had a mortgage approved for a property that has CONFIRMED chancel repair liability? If so, did the lender insist on liability insurance (and if so, what was the required insurance - ie full value of house or more?). I have spoken to a specialist insurance company today and they are estimating between £600-£1000 for the policy based on insuring for full value of property (250k) which in the grand scheme of things is pretty insignificant, my main worry is the lender wont lend with CONFIRMED liability.

Im just wondering if anyone knows of any guidelines lenders work to when dealing with this, as its going to take them a few days to come back to me with an answer as to if they will or wont lend to me (even though ive had the formal offer before the chancel report results came in), and if they do require the me to have liability insurance.

Im planning on getting insurance anyway (if they agree to lend on the property), i guess the insurance question is more around how much cover i would be expected to need.

The mortgage lender is first active (underwritten by RBS), and if they arent willing to lend then its likely i would have to go for another property.

I've also put a call in to the surveyor who valued the property (for the mortg company) to see what his thoughts are on wether this would affect the value of the property, even if insurance was in place. But i just want to prepare myself for the worst if they wont lend on the property...

Also not sure if it helps, but the local church has had a number of repairs in last few years, including leading on roof, new stained glass window, and fitted kitchen!, all of which was generated through fund raising, and to my knowledge have never excercised the right of chancel repair to any other residents in the village. I obviously cant contact them and ask them if they intend to, as this would invalidate any insurance policy i purchased.

Thanks for taking the time to read this, i know its a bit of a long one...

Conrad

It's a buyers market out there, would you consider ditching this one?
I wouldn't want a lose end like this keeping me awake

diddlydee_3

I agree with Conrad. It is a buyers market out there. If you still go through with it (and I hope it works out for you) can't you go back and start re-negotiating the price again. I think there is a reason for everything!!

ems11

Thanks for the replies.
Yes, i agree it is a buyers market, but the only consideration stopping me doing that is that i specifically want to be in this rural village (fantastic location, great nursery, lovely village feel and the property is already great and so much potential) and the prices are now just becoming affordable due to the current climate whereas they werent 18 months ago, and whilst they still may have a little (?) way to fall, I think I got a pretty good deal.

I did look at another property in the village, but have a sneaky suspicion that if the current one has chancel repair indemnity, its fairly likely the other one (and infact most of them in the village?) would be subject to it too.

However, having said that, I discussed this with the mortgage valuer today (who also did a full building survey for me), and he didnt seem to think it was a problem in terms of value of the property, or for security for lending purposes. His view was pretty much the same as mine in that if the lender did require me to have insurance (which i think i would get anyway), as long as that was in place it wouldnt affect the value or the future saleability of the property.

I guess the question is how the lenders view this?!!

I may hear something from them tomorrow so if i do i'll let you know, but in the meantime if anyone else has any experience of having a mortgage agreed on a property with confirmed liability, i'd be grateful to hear your experiences of it.

Also, does anyone know how common it is for lenders to refuse to lend on properties with confirmed liability? Is this the majority of lenders, or a small few.

opinions4u

Get the vendors to pay for the insurance.

silvercar

If you don't buy it the sellers have a problem. All future potential buyers will need to be told, fairly early in the process that there is a chancel liability. For you to work away now is harder than for a new buyer to walk away before incuring any costs. Your sellers should be bending over backwards to keep you interested.

ems11

Thanks guys. Yes, i agree it does leave the vendors with a real problem as they definately do now have to declare it, and if any future potential buyers require lending on the property, then the same searches will have to be done by the solicitor, and will highlight its a confirmed liability.

However, my concern isnt really paying for the insurance (as im sure that they would contribute half or even pay all of it, but its more around the time taken between the two lots of solicitors to sort it out (and the additional costs), as im certain the vendors have no idea that its liable (well they probably do now as my sols wrote to theirs at the beginning of the week).

My concern in relation to the insurance would be that it would take a while to sort, and we are due to exchange in about a week. If I know that the lender will still lend on the property where there is a confirmed liability, then the insurance becomes less of an issue, as that can be sorted.

Do you think im worrying unecessarily about the lenders? Or is this something they would view as too big a risk? No-one seems to be able to quantify the risk, though most of the parties ive talked to about it (surveyor, solicitor, insurance company) agree that its an un-known risk, but the liklehood is very very low. Although that doesnt necessarily mean that the lender will take a sensible approach to it does it?

toonfish

I think they can do the insurance pretty much immediately - we did a similar case with C&G and the solicitor arranged the insurance same day

ems11

Toonfish, thanks thats encouraging to know. Do you know if the case was "potential" liability or "confirmed" liability?

I fully understand there is a big difference in insurance premiums (potential v confirmed liability cover), just wondering if lenders think that confirmed liabilities are too risky (as opposed to potential) even if insurance is in place? I think that may be the sticking point... if there is one...

payless

Really your legal adviser should speak to lender ( the dept that deals with Report on titles/ completions) to get the answers that you are looking for

toonfish

ems11 wrote: »

Toonfish, thanks thats encouraging to know. Do you know if the case was "potential" liability or "confirmed" liability?

I fully understand there is a big difference in insurance premiums (potential v confirmed liability cover), just wondering if lenders think that confirmed liabilities are too risky (as opposed to potential) even if insurance is in place? I think that may be the sticking point... if there is one...

I've just checked and it was potential, insurance premium was £90