Risk Management re - Covenant

Swift_2

My partner and I are almost ready to exchange contracts on a house purchase. Something has come to light, however, which concerns us.

There is a covenant, in the original sale of the property from the local authority, to the first private owner, which requires that any owner should get consent from the local authority (now a housing association) if any alterations are planned.

About 20 years ago the property was extended. We have evidence of planning consent but not building regulations approval as yet.

We have asked the current owners to provide proof that the local authority consented to the extension but they have been unable to do so. We do not know if this is because there was no such consent or if the current owners do not want to approach the housing association and risk being told to restore the property to its original condition at their expense.

They have offered to share the cost of an indemnity policy but that does not eliminate the risk. Nor does it eliminate the inconvenience if we buy the property and the housing association force us to reinstate the property. Removing the extension will significantly reduce its value and it will no longer meet our needs.

What we really need to establish is the level of risk so that we can decide whether we should:

1) walk away,

2) accept and rely on the indemnity policy,

3) insist that the seller eliminates the risk by contacting the housing association and getting either proof that consent was given, or by getting retrospective consent,. or,

4) contact the housing association ourselves to find out the status of the property from their point of view.

Any opinions?

silvercar

building regs approval from 20 years ago?

Too long has passed for the council to take action. An indemnity policy is not necessary, but if it keeps you and your lender happy then negotiate who should pay and get one.

You do need to check with your survey that the building work is upto standard.

Getting consent to an alteration is a different matter, I would very much doubt that the HA could insist on restoration after so much time, but ask your solicitor if it is possible.

One thing to check is whether the house was first sold before or after the extension. If it was first sold after the extension then the extension was part of what the council sold, so there isn't an issue.

Swift_2

We're not at all concerned about building regs approval as, after 20 years with no movement, it's very unlikely to be an issue.

The house was originally sold with no extension. What we don't know is whether the local authority or the housing association were in control of the estate at the time the extension was planned and built. If it was the LA then they know by default as they gave planning permission. If, however, it was the housing association which took on responsibility from the LA it's possible planning permission was granted and the housing association never approached to give their consent.

The size, position and age of the extension make it extremely unlikely that the housing association are not aware of it.