Indemnity policy

CrossyX

I have had a search through the forums but i am still a little lost with regards if we actually need a indemnity policy.

We are at the last leg of buying a house (first time buyers) and the solicitors have rang us up and said that we should look at getting a indemnity policy because the house we are buying has had work done without any planning permission. At the back of the house they have extended a few feet to make the kitchen and second living area a little larger. I do not know when the work was exactly done only that it was well over 12 months ago. The solictor is saying that it will cost us around £190 but that is not the main issue. We are due to complete in about a week but we are now really worried that if we move in we will have to start pulling walls down etc to put it back to the way it was which we have no way of doing due to costs etc. Any info would be brilliant.

What exactly does the policy cover?

Do we really need it?

Thanks

Crossy

CrossyX

I forgot to mention that we already had a homebuyers report, i dont think that makes any diffrence to our situation unless you have a structural report?

Thanks again

silvercar

The policy covers the council insisting that the extension be removed. Hardly likely to happen as (a) it was probably within permitted development rules, (b) the council don't know about it, (c) chances are they would grant PP if it was needed. (d) if it happened more than 4 years ago it is too late for the council to act.

Taking an indemnity policy saves waiting weeks while the sellers apply for retrospective PP or a letter confirming tht it isn't necessary.

An indemnity policy will keep your mortgage lender happy.

What it won't do is cover you for shoddy workmanship, so check your surveyors report.

lincroft1710

Not all extensions require planning permission, but they do need to comply with building regs. Unfortunately if you contact council regarding this you will not be able to take out indemnity policy.

If extn has building regs approval, then foundations, insulation, electrics will all be up to specifications current when extn built.

CrossyX

Thanks for replies, i think we will just get it to save hastle.

Thanks again

lindos90

We had a similar issue when we sold our last property about 7 years ago, as the garden was not actually ours (boundary stopped two meters off back door), but was fenced off by the previous owners and used by them as a garden for several years.

All our solicitor get them to do (at the time we bought it) was to draw up a letter stating how long they had used it, because after 'so many' years if uninterupted use it become 'adopted'

When we came to sell, the solicitors for the buyer was more thorough and said an indemnity policy was needed, incase the rightful owners turned up and demanded the land back. The cost of that had to be paid by us, as the current owners before the sale could go ahead....in your case as the current owners have done the work without PP, maybe they should be the ones paying for the Indemnity insurance? (or at least contribute?)

CrossyX

I totally gree but he has started to become akward saying he will pull out if he has to pay. Looks like we will have to take it on the chin.

Thanks

gail1159

This is my first posting but I can't seem to find the answer to our problem anywhere.

We are in the very last stages of selling our house but found out yesterday that our buyer's lender will not release funds because our 7 year old house is on an unadopted road. They are insisting that our buyers be covered by an indemnity policy in case the builders (David Wilson Homes) cease trading in the current economic climate, leaving our buyers liable to pay for adoption of the road and sewers. The buyers' solicitor has said they are unable to find a suitable policy so they cannot proceed at this time!

Has anyone else come across this situation and if so, can you advise where such a policy can be obtained? Also, who is liable to pay for it, the buyer or the seller?

Any help would be much appreciated!

Dumbledore55

We had a similar situation when we bought our house recently regarding the conservatory being built without permission from the original builder.

It is the SELLERs responsibility to take out the indemnity policy but as is often the case we reached a stalemate with them refusing to pay. It then depends how much you want the house whether you pay or call their bluff. We paid but I do resent it. Amazing how all their post that hasn't been redirected gets returned to sender rather than forwarded to them! The difficulty is that if you're getting a mortgage the lender often insists on the indemnity policy. The buyer will say that its the sellers responsibility due to the fact its their mortgage lender asking for the policy. However, the problem will arise every time they try to sell unless they find a cash buyer. It's a Catch 22 really.

If you love the house and you genuinely think they'd pull out the sale, then £190 is worth paying. Your own conveyancing solicitor should be able to sort the indemnity for you as part of their service.

gail1159

Thanks for that Dumbledore55, but we are the sellers and we are moving into rented just to keep the chain going. Both our solicitor and the buyers' solicitor are not able to find a specific policy to cover this situation and the one policy that got close cost around £890!

cheekymoo

Can mortgage lenders refuse to let you have an indemnity policy?We might need one because the house we are buying only has half the garden. I am frightened the mortage lender will not allow us to have one.