Buyer want me to pay for indemnity policy

reverend

Hi all,


I was wondering if anyone had an opinion as to whether I should pay this. I am near completion selling my shared ownership flat and buying another shared ownership flat. My buyers solicitor insists that the lease that my buyer would be taking on for my flat is defective in that it does not impose covenants to be enforced on the superior landlord. He wants me to pay £315 for an Indemnity Policy. I am afraid I know no more detail than that, other than the below, which is some details about the policy. I will find out more about it, but not until I go in the my sol's office to sign my new lease. Actually, I don't think i have any choice but to pay is, as my buyers sol is insisting and won't allow completion without me paying for it.

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Re: [address]



Thank you for your enquiry dated 26 March 2010.



The premium required will be £315.00 which includes Insurance Premium Tax of £15.00 for a limit of indemnity of £280,000.00 for a policy to cover the period of the mortgage, subject to our receipt and satisfaction with advices as to the precise commercial use of the other part of the development referred to in your enquiry and where this is in relation to the property. Please also provide the registered title entries to the property.



Assumptions:



This quotation has been provided on the basis that other than has already been disclosed to us:



1) none of the parties to the current transaction are aware of any repair or maintenance required for the necessary protection of the property or of any difficulty enforcing such repair and maintenance

2) there are no proposals to change the use of the Property or to extend or alter internally or externally the structure of the building currently built on the Property

3) the property is and will continue to be used as a single private dwelling house as existing at the proposed commencement date and there are no proposals to change the use of the Property or to extend or alter the structure of the building currently built on the Property

4) no retentions, nor remedial works are recommended by the mortgagee’s valuation, and nothing adverse to the risk is revealed by any other survey report



The Insurer is First Title Insurance plc.
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Thanks all !


/rev

CloudCuckooLand

As a general rule, I would say that a seller needs to pay for an indemnity policy.

They have the opportunity to try and resolve the issue, in a unhurried fashion, whilst living there - if they choose not to deal with it in a controlled fashion that's their choice, but if they then want to sell and it is a point of concern they need to satisfy those concerns, otherwise they risk sitting on the problem/house indefinitely.

If the seller had a conveyancer who didn't spot the issue, they might revisit the conveyancer to find out if they can reclaim the cost, being an oversight/mistake, perhaps.

reverend

Thanks for your advice CloudCuckooLand

seabright

Agree with CCL, it's generally considered that the seller has to provide a good and marketable title and sometimes that means paying for the insurance.

It may be that insurance wasn't needed when you bought, because at that time what is now considered a defect in the lease was acceptable to mortgage lenders and therefore acceptable to buyers. Mortgage lenders alter want they will and won't accept over time, so there may not have been a mistake when you bought, it's just that mortgage lenders are much more risk-averse now

reverend

Many thanks for your advice Seabright