Indemnity insurance - who does it cover?

patricia..xx

Hopefully a quick one! We are asking for indeminity insurance to cover lack of building regs. We are happy the work is safe, but are concerned this will come up again when we sell.

Does a standard indemnity policy cover us or the house? I.e. if we get an indemnity from the sellers can we use it when we come to sell. If this isn't standard does anyone know if it is possible to get a policy that runs with the house for say 10 years?

Thanks in advance

Cannon_Fodder

It should be transferable from vendor to buyer, ad infinitum, subject to premium adjustment for the change in value of the house.

Richard_Webster

Building Regulation Indemnities usually last forever because as time goes on the very small chance of enforcement action gets even smaller and the risk to the insurer therefore diminishes.

The policy only protects against the very small risk of enforcement by the local authority and does not pay out if there is any structural failure or damage resulting from non-compliance with the regulations. You can't get a policy if anyone has talked to the Council about the work in question and the work must be more than a year old. After a year the Council's main enforcement power lapses (hence the reason the insurers make this a condition). A Council is left with seeking an injunction in the Civil Courts for the work to be undone.

I am still waiting for somebody to tell me about a case anywhere in England/Wales where a Council has taken injunction proceedings in respect of an ordinary household extension that is more than a year old. If they did this for say a 10 year old extension they would probably make the front page of the Daily Mirror the next day!

The policies exist largely because mortgage lenders will not use their common sense and come up with some sensible rule of thumb as to how far back we have to check these things.

patricia..xx

thanks for the replies that is much the same as our solicitor just advised. we meet all the criteria that you mention Richard. Although for info this is not a point that our mortgage company requires, we just fail to see why we should bear any risk for the fact that the seller decided to pay a mate cash in hand rather than do things properly. We have been caught out on similar on a previous purchase when we then came to sell so just being ultra cautious

Richard_Webster

we just fail to see why we should bear any risk for the fact that the seller decided to pay a mate cash in hand rather than do things properly.

What did your surveyor say about the work? Did he have any concerns about the work?

You could go to the lengths of insisting the seller gets the Council's building inspector to check it all and obtain a regularisation certificate. It really depends on how worried you are that there will be an actual problem with the work. If that is your main concern then the policy is irrelevant, but might be required to keep the lender happy.

I say "keep the lender happy" because the reality is that buyer's solicitor frequently has a choice of explaining the whole position to the lender and seeking guidance or simply getting a policy which can be waved at the lender if they ever make a fuss. If their guidance is sought they can take a few weeks to provide an answer and they may say they require a regularisation certificate to be obtained. There will be a lot of cases where the work is fairly old and the buyer himself thinks this is over the top particularly if it means removing plaster etc to see what is beneath.

patricia..xx

Don't want to go into too much detail as I think from a previous post the seller is on the boards too (spooky!) but it isn't building work as such, but something that should have been self certified as wasn't. We suspect this is because it wasn't to current standards, although not dangerous