NO NHBC or Architects Certificate

Pud842

Hi, could anyone please shed any light on the following, my partner built a property on land he owned adjacent to his own property, which his brother and wife purchased over 2 years ago. No NHBC Certificate or Architects Certificate was provided or requested at that time (as none could be provided!). They have now decided to sell and are insisting that it is up to my partner to provide a guarantee/warranty that the purchasers Solicitors are requesting. Not being NHBC registered and the architect not being qualified at the time (as it was a standard build matching the rest of the estate) he can't provide either of them, but they are insisting that he provides Zurich Insurance to enable them to sell. Should their Solicitor not have picked this up when they purchased the property? and is he still required to provide it or is it now up to them to take out the necessary insurance? It's a sticky situation as my partner has only just got a large sum of money that they have owed him for the build for over 2 years! Any advice would be appreciated, thanks.

Thrugelmir

Pud842 wrote: »

Hi, could anyone please shed any light on the following, my partner built a property on land he owned adjacent to his own property, which his brother and wife purchased over 2 years ago. No NHBC Certificate or Architects Certificate was provided or requested at that time (as none could be provided!). They have now decided to sell and are insisting that it is up to my partner to provide a guarantee/warranty that the purchasers Solicitors are requesting. Not being NHBC registered and the architect not being qualified at the time (as it was a standard build matching the rest of the estate) he can't provide either of them, but they are insisting that he provides Zurich Insurance to enable them to sell. Should their Solicitor not have picked this up when they purchased the property? and is he still required to provide it or is it now up to them to take out the necessary insurance? It's a sticky situation as my partner has only just got a large sum of money that they have owed him for the build for over 2 years! Any advice would be appreciated, thanks.

Their solicitor should have picked this up in the purchasing process. In fact this may have happened.

However the policy wouldn't be transferable to the new purchasers in any event. As would be based on the current purchase price/insurance value of the property itself.

As the sellers I would think that it is up to them to arrange an indemnity insurance to cover the lack of NHBC Certificate or Architects Certificate. Not a big deal as often happens on self builds etc.

Doozergirl

Thrugelmir wrote: »

Their solicitor should have picked this up in the purchasing process. In fact this may have happened.

However the policy wouldn't be transferable to the new purchasers in any event. As would be based on the current purchase price/insurance value of the property itself.

As the sellers I would think that it is up to them to arrange an indemnity insurance to cover the lack of NHBC Certificate or Architects Certificate. Not a big deal as often happens on self builds etc.

Those policies are transferable to subsequent owners - it covers the house.

I was not under the impression that indemnity insurance will suffice either? I can't imagine that any buildings insurance provider would cover for structural issues caused by the house not being properly built and I don't think indemnity insurance would cover physical things like that either? As far as I am aware, a new build house under 10 years old without an insurance backed warranty is not a mortgageable property. Not to say that it can't be sold.

If the brother has only just paid for part of the house, was the sale done 'properly', as it were, with searches carried out for mortgages etc rather than a simple transfer of ownership? It is something that a solicitor should have picked up if they were carrying out all the checks required by a mortgage lender. If it were a cash sale, the buyers might not request it.

Your partner would never have been able to sell that house to a stranger without that warranty so I would agree that it should have always been his responsibilty to organise a warranty. Yes, perhaps a solicitor should have picked it up originally but the result of that is that your partner would have been asked to provide one.

Thrugelmir

Doozergirl wrote: »

Those policies are transferable to subsequent owners - it covers the house.

I was not under the impression that indemnity insurance will suffice either? I can't imagine that any buildings insurance provider would cover for structural issues caused by the house not being properly built and I don't think indemnity insurance would cover physical things like that either? As far as I am aware, a new build house under 10 years old without an insurance backed warranty is not a mortgageable property. Not to say that it can't be sold.

If the brother has only just paid for part of the house, was the sale done 'properly', as it were, with searches carried out for mortgages etc rather than a simple transfer of ownership? It is something that a solicitor should have picked up if they were carrying out all the checks required by a mortgage lender. If it were a cash sale, the buyers might not request it.

Your partner would never have been able to sell that house to a stranger without that warranty so I would agree that it should have always been his responsibilty to organise a warranty. Yes, perhaps a solicitor should have picked it up originally but the result of that is that your partner would have been asked to provide one.

I wasn't refering to building insurance. Any form of indemnity insurance is to cover specific events in this instance the lack of NHBC certificate. The insured under the policy will normally be the mortagee (on behalf of the lender). Hence not transferable.

The policy would not cover any structural issues noted prior to purchase.

The policy would only require a one off premium payment.

A few years ago I lived in what was originally a new build on a brown field site. Selling some 18 years later. Searches revealed that some 120 years previous that the whole developement was built on an engineering works. So what was in the ground was unknown. Our purchasers took out an indemnity policy in the event that that the property had to be demolished, the top soil removed , replaced and the house rebuilt. We paid the one off premium of around £375 for £335k of cover. No hassle at all.

Pud842

Thank you for your replies.

My partners brother approached him about purchasing the land initially - which they did and then my partner built the house to their specification, fixtures, fittings etc, they knew no Certs could be provided but ensured my partner they intended to stay longer than 10years. Everything was signed over, deeds for the land etc when they purchased the land about 3/4 years ago, the house has always been in their name. His brothers idea re. the outstanding monies was that it was eventually to come from their dads estate (but he failed to run this by dad and he wasn't too happy, hence the reason why he's had to settle up sooner). His brother and his wife have always been adamant that they have a mortgage on the property and were reluctant to extend the mortgage to settle their debt (as they don't want a mortgage - wouldn't that be nice!), hence why they are now moving plus my partner still owns the house next door.

Having read your comments, it seems likely that they haven't got a mortgage, and never have had, otherwise this would have been picked up on during their purchase and now this has been highlighted to enable them to sell they are trying to lay the responsibility on my partner.

If they hadn't shown an interest in purchasing the land/property my partner would have ensured the Architect was qualified or taken our a personal insurance to enable him to sell, but he was assured they wouldn't be selling in the near future.

Thrugelmir

Pud842 wrote: »

Thank you for your replies.

My partners brother approached him about purchasing the land initially - which they did and then my partner built the house to their specification, fixtures, fittings etc, they knew no Certs could be provided but ensured my partner they intended to stay longer than 10years. Everything was signed over, deeds for the land etc when they purchased the land about 3/4 years ago, the house has always been in their name. His brothers idea re. the outstanding monies was that it was eventually to come from their dads estate (but he failed to run this by dad and he wasn't too happy, hence the reason why he's had to settle up sooner). His brother and his wife have always been adamant that they have a mortgage on the property and were reluctant to extend the mortgage to settle their debt (as they don't want a mortgage - wouldn't that be nice!), hence why they are now moving plus my partner still owns the house next door.

Having read your comments, it seems likely that they haven't got a mortgage, and never have had, otherwise this would have been picked up on during their purchase and now this has been highlighted to enable them to sell they are trying to lay the responsibility on my partner.

If they hadn't shown an interest in purchasing the land/property my partner would have ensured the Architect was qualified or taken our a personal insurance to enable him to sell, but he was assured they wouldn't be selling in the near future.

I wouldn't worry about this. Its not your partners issue to resolve.

Pud842

Thank you, there are other ongoing issues, namely that his brother has already reduced the amount of money owed due to him having to pay earlier than anticipated, which is the main reason my partner is reluctant to fork out for any 10 year warranty! :rolleyes:

Emmzi

anyone buys a house 'as is' at the point of the title changing over, and if they chose to take a short cut on solicitors fees, it is not your partners problem.

Doozergirl

I agree with Thrugelmir, it doens't sound like it's your partner's issue if it was actually built for them for the long term.

It does sound like they took short-cuts on the conveyancing otherwise it would have been pointed out to them when they purchased.

Doozergirl

Thrugelmir wrote: »

I wasn't refering to building insurance. Any form of indemnity insurance is to cover specific events in this instance the lack of NHBC certificate. The insured under the policy will normally be the mortagee (on behalf of the lender). Hence not transferable.

The policy would not cover any structural issues noted prior to purchase.

The policy would only require a one off premium payment.

A few years ago I lived in what was originally a new build on a brown field site. Selling some 18 years later. Searches revealed that some 120 years previous that the whole developement was built on an engineering works. So what was in the ground was unknown. Our purchasers took out an indemnity policy in the event that that the property had to be demolished, the top soil removed , replaced and the house rebuilt. We paid the one off premium of around £375 for £335k of cover. No hassle at all.

Sorry, I know you weren't talking about buildings insurance, I was making a separate point which perhaps should have been in a separate paragraph. Assessing the risk, I am almost certain that buildings insurers will not cover a property that doesn't have a warranty.

I did misunderstand that the transferable part you were talking about indemnity, I thought you were talking about the actual 10 years warranties.

I am still not sure that an indemnity will cover such a current and proper risk? If they did, I could imagine the fee would be quite high.

Thrugelmir

Doozergirl wrote: »

Sorry, I know you weren't talking about buildings insurance, I was making a separate point which perhaps should have been in a separate paragraph. Assessing the risk, I am almost certain that buildings insurers will not cover a property that doesn't have a warranty.

I did misunderstand that the transferable part you were talking about indemnity, I thought you were talking about the actual 10 years warranties.

I am still not sure that an indemnity will cover such a current and proper risk? If they did, I could imagine the fee would be quite high.

Potentially the underwriter could require the proposer to obtain a full structural survey. In order that any issues could be identified.

As the property would have complied with building regulations etc its unlikely that the risk is uninsurable.

As you said the buyer cut corners, and is now dealing with the consequences.