Advise needed regarding indemnity policy on repossession

Archi_Rag

Hi, i am a first time buyer who has found a property that has a few problems with it. It is an old warehouse that has been converted into apartments that the previous owner has done, its resale price was very high and the previous owner couldnt keep up.

It was completed in 2003 with no NHBC (in understand there would only be 3 years left) but as a result makes it hard to mortgage, I've been advised not to notify the council by the estate agent/vendor as this will cause any enforcement to come into place.

The agent has said that this would be ideal for a cash buyer but I don't have that kind of money but has said that indemnity insurance would cover me if I wanted to go ahead with the sale (along with a full structural survey). From this I now have quite a few questions that need answering and was wondering if anyone could help clarify a few things before pursuing this further....

1) Who provides the indemnity insurance, is it the mortgage provider, if not does anyone know of a good company for this?
2) How much is a typical amount to pay for this and does it constantly need to be renewed?
3) Would this have a knock on effect to future buyers (would they need this cover if I were to sell on)?

A further complication is that there are 4 apartments altogether all requiring this cover, if I were to get insurance and someone was looking at a different one of these who notified the council, would it void my policy? from what i understand you cant take out this cover if the council is already aware that there are already problems.

I am a training architect and from my visit i have noticed a few small remedial problems and an issue with the width of the stairway that doesnt comply with current building regs, although at the time of construction, may have been fine.

Thanks for looking any help is appreciated

clutton_2

i would take no action on the advice of the EA - he works for the vendor... all the questions you have asked are much better addressed to your solicitor... he will have legal title for the property in questioin and will get more information about the other flats in the block....

in general terms you or the vendor would buy the indemnity policy

this sounds like a legal nightmare and only your solicitor will be able to answer your queries.. he will need to obtain searches etc to look at before answering your questions, and you will have to pay him for those - so you could lose a bit of money if he says its a "no-go" - but rather lose a few hundred now than thousands down the line.....

have you got a good mortgage broker who can assess whether you can get a mortgage or not ? that might be another way forward ?

Archi_Rag

Hi, thanks for your response,
the agent has informed me that i can use the indemnity as a condition of my offer on the property, I spoke to the halifax who've said a full survey/indemnity policy would be required before any approval of the mortgage went through.

again thanks for your help

Richard_Webster

The Council has nothing whatever to do with NHBC cover so I think you are confusing two different issues.

Lenders will only lend on properties built or newly converted in the previous 10 years if there is NHBC cover or in many cases a certificate given by certain professionals that they have checked the work and it was done properly - usually referred to as an Architect's Certificate.

I'm not sure how you can get an indemnity insurance to cover that issue.

The other point is Building Regulations and that is generally the issue where it is not wise to talk tot he Council! There is the possibility of enforcement action but this is generally very unlikely if the work completed a few years ago. Without the relevant completion certificate there is the point that there could be structural or fire safety issues with the property that could either cause a real problem later or the fear of them might deter a future buyer.

You can obtain through a solicitor a Building Regulation Indemnity Policy but these only pay out in the event of enforcement action and not if there is loss or damage resulting from a failure to comply with the regulations.