Indemnity Policy? Advice Needed!

luofei

Hi there,

I'm new to this forum and attempted to post this question earlier but don't think it worked. Apologies if I'm repeating myself! ;-)

I'm hoping someone out there has had experience of or knows something about indemnity policies?

We're buying a ground floor flat in London, in a house that's been divided into two flats. Our solicitor has told us that the lease is "defective" and that we should take out an indemnity policy to cover this.

His main issue is with insurance - we would own the freehold title for the property and would apparently be held accountable for any work that needed doing (e.g. roof repair).

The only other option is to re-draft the lease, with the cooperation of the upstairs flat owner, but apparently this would be time-consuming and costly. Our solicitor estimated £2000.

We've already had to pull out of the purchase of one place, so we're really keen to go ahead with this one, but I'm just not convinced about the indemnity. I'm concerned we'll have problems in the future when we look to sell the place...

Any advice/comments/words of encouragement(!) would be greatly appreciated...

:-)

rjm2k1

Never had one myself, but they are common and should not be anything to worry about. I know someone who has one as the house they bought didn't get building regs for a loft conversion. They are normally a one off fee of a couple of hundred quid maybe, and cover the costs of setting things right if anything goes wrong in the future. Check if it can be transferred if you sell the place.

Doozergirl

The indemnity policy will cover subsequent owners, so you shouldn't encounter the problem when you sell.

You should ask your vendor to cover the cost of this. It's minimal cost in the grand scheme, but it's their lease that's defective right now, not yours!

Julysea

We had to get an indemnity policy for our place when we bought due a defect in the lease (never quite clear what the defect was!), I think it cost us about 40 quid. The alternative was a deed of variation to lease to amed the defect which the freeholders refused to do. It hasn't been a problem in itself, the only problem has been that now when we're selling, the freeholders have offered to do the deed of variation for a thousand quid plus 250 costs plus VAT, which on top of other costs is too much for us, so we're just renewing the indemnity policy for our buyers to cover the increase in market value of the property and that seems to be fine.

luofei

Thanks for the comments guys; I think we're going to go ahead with it because we love the flat and want to get moving now! I guess we can look into redrafting the lease in the future, but our solicitor thinks the indemnity is the best solution open to us right now...

Fingers crossed!