title indemnity insurance - really necessary?

free4440273

hi, let me cut a long story short. the house i intend to purchase has not been registered, so my solicitor says that upon completion we will need to apply to land registry to have the property registered. on the house purchase forum many members kindly posted that the property not being registered presently (whilst in the vendor's ownership for whatever number of years) was not anything to be worried about. some kindly suggested taking out title indemnity insurance to cover myself. two questions:is this actually worthwhile? has it got a good press? does it really cover you (unlike, say, the mortgage endowment fiasco of the past). secondly: will high street mortgage companies like nationwide and halifax provide it? what i would really like to know is: is it really necessary? i know i am asking people to stick their necks out but i would appreciate the advice. as always, thank you all and have a lovely evening also

towseriv

our solicitor offered it to us. It was something like fifty pounds. In his words it covers us "for any mistakes he may of made or problems that arise such as the title being registered incorrectly" This is only needed if you want to take a chance that something will not go wrong and that you can afford another lot of solicitors fees to correct it if it does. I am not one to buy all insurances available but took this one purely not to have to worry if anything had gone wrong.

oldwiring

Personally I would not worry if the solicitor says he has traced a good root of title at least fifteen years old. He seems a belt braces and a piece of string man, either that or not confident or competent.

Root of title.
This is the deed to which title to a property is ultimately traced to prove that the owner has got good title. It applies only in relation to unregistered land. Under the open contract rules, the seller is required to give evidence of title starting with a “good root of title” at least 15 years old (section 44, Law of Property Act 1925). If the land is to be registered at the Land Registry with title absolute, a good root of title and an unbroken chain of ownership is required.
To be a good root of title, a document must satisfy each of the following requirements:
· It must deal with or show the ownership of the whole legal and equitable interest in the land in question.
· It must contain a recognisable description of the property.
· It must not contain anything that casts any doubt on the title

If I recall correctly a conveyance of freehold property and a legal mortgage are among those things deemed suitable proof.
Usually one obtains from the Land Registry on 1st Registration
Freehold Title Absolute: Good Leasehold Title: or rarely the superior Leasehold Title Absolute.
There are other grants of title that may carry more risk- Possessory: Qualified
See http://www.landregistry.gov.uk/assets/library/documents/lrpg042.pdf
And if something unfortunate should come there is a compensation system
http://www.landregistry.gov.uk/ar2004/inside/

I am not a legal person but worked in a bank many years ago and did quite a bit of examination of deeds for mortgages securing loans made by the bank. I hope this all helps, but remember this is only my lay opinion



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free4440273

you are both extremely kind. thank you both so much for your help in this. have a good remainder of the week

andywall

Title indemnity cover will cover you for breaches of covenants by the previous owners. These are legal terms and I'm sure you are baffled by them so I will try to explain in english.

When a house is sold a deed is created. A deed is another word for a contract. There are some legal differences between a deed and a contract which I wont bore you with.

In those old deeds between all the different owners over the years there may be covenants. These will be things like "no future owners can build on the land without my permission". This means that if any owner since that covenant was created in a deed, lets say of 1951, has built on the land without the permission of the original covenator - he will have breached the covenant and he can be sued by the original bloke who put the covenant in in 1951.

Indemnity insurance will protect him from being sued. The insurer will pay out instead of him having to. You should really take the advice of your solicitor on this point. He/she will be able to tell you what all the covenants are in all of the previous deeds and also whether any of them appear to have been breached by any previous owners or indeed are likely to be breached by you if you wish to build on the land etc when you are the owner. There can be covenants for anything. The usual one is "not to let the property fall into disrepair" but you can have covenants in relation to maintaining shared boundrys - fences, hedges etc and other things. They usually prevent you from doing something with the property.

If the risk of a breach (and being sued) is high then the insurance will be high. If not then it is low and I belive most indemnity insurance policys tend to be one off low payments. Your solicitor should be able to arrange suitable insurance for you. It is worth mentioning that if he is getting an introducers commission for taking the insurance out with his preferred company - and the commission is over £20 he has to ask you if he can keep it. You can say no in which case I think it comes to you instead.

andywall

Further to the above as 'oldwiring' has said if you have a good route of title - that is, your solicitor is satisfied that he has accounted for every day that the property has been owned (and who owned it) going back at least 15 years to a conveyance, then you will probably not need 'defective title insurance'.

If you do not have a good route (which rarely happens) I would carefully reconsider whether you want to buy the property and your solicitor should be able to advise you in this regard.

oldwiring

Andy's post (#5) is something to be considered, but realistically. Is a coveneabt old; have there been breaches in the past, that have not been acted against? Look at many an estate development and you can find such things.

As to title itself, I would not look at anything with a Qualified title, and look carefully at a Possesory. Titles superior to those are OK. With Leasehold aprt from the title issue you need consider the terms of the lease for onerous or potentially onerous clauses. That is another matter the solicitoe should advise on. However khowing the legal breed, I would not look for a clear yes or no!;)

free4440273

andywall and oldwiring, thanks both for your help in this matter, you are both extremely kind with your knowledge. apologies for the late 'thanks' - work just keeps getting in the way! i am getting to grips with this matter - it's just that i cannot make head or tail of the old covenants my solicitor has provided me with. some are quite illegible also. i feel that my solicitor might quite rightly say that he has provided me with the covenants and the ball is now in my court to understand what they mean. perhaps i simply should fork out for the indemnity insurance if it does indeed cover me for any mishaps in the future? thanks again

stewanddebs

Folks could anyone advise me on our situation please.

We bought my Parents ex-local authority property roughly two years ago (they having owned it for around 10 years prior, and then being council tenants for around 10 years prior to that). They sold it to us for £15000 under market value, this was in lieu of monies owed to us through the years. We are now selling the house but our solicitor has informed us that they want us to pay for a "Title Indemnity Policy" at a cost to us of £150. Now as I see it this policy is to protect the vendee’s solicitor, who will be conducting the search. However since the house has been in ownership by the same family for 12+ years and occupied by my Parents 10 years prior to this and the same solicitor who is representing the couple who is buying it from us represented my Parents when they sold it to us, is this not a case of rip-off!

Any thoughts greatly appreciated.

nickyboy12903

I have an issue that is worrying me and whenever I speak to my solicitor she placates me with the "it will be OK, stop worrying" line.

I am selling a share of freehold flat and have managed to find (in amongst discarded paperwork left at the property when I bought it) that the original planning permission which is more than 15 years old, does not fully agree with the actual footprint - in essence, the previous owner built a rear extension to the property, which we did not find on the title and I am now panic stricken that I will be unable to sell if this is picked up.

I have re-constructed much of the flat as it was reasonably derelict when I moved in and got the sign-off from teh Building Inspector, but my solicitor says she will just get around it with Title Indemnity Insurance - is that possible ?

Help !!!!!!!!!