Restrictive covenant insurance - help please!

Leslie_from_Pinner

We are selling our house and the buyers' solicitors have informed our solicitors that the Land Registry copies of restrictive covenants from 1909 and later are illegible. On approaching the LR for fresh copies, our solicitor was informed that the original documents have been destroyed and they regret that the copies are illegible. On this basis, the buyer's solicitors are asking for us to purchase indemnity insurance. Our solicitor informs us that the cost will be £995 plus tax (the property is valued at seven figures).

I have gone back to the solicitors who acted for us on the purchase of our property as I did not recollect any such issue arising in 1995. Unfortunately, the file is no longer held by them so it is impossible to establish if legible copies of the covenants were available at that time.

At no stage has anyone ever sought to enforce a covenant during the last 15 years and we have no knowledge of any breach (given that we don't know what the covenants are!).

My questions are:

- is the cost reasonable? I have seen quotes on this site for less than £200 for admittedly a smaller property.


- is it normal for the seller to bear the full cost, or would it be reasonable for us to ask the buyer to split the cost with us? They only need it for their lender.

- do we have a claim against the Land Registry (or can we insist that they pay for the insurance)?

I would be much obliged for informed comment.

Thanks!

Richard_Webster

Legal & Contingency will do £1million cover for £310 and £1,5million cover for £450.

You could try claiming against the LR. I have certainly heard of cases where e.g. a plan was missing because the scanning company they used missed it and the LR have paid for a policy. Another possibility is that the same conveyance affects other nearby property and you could get a better copy from one of those titles and persuade the LR to use that.

Leslie_from_Pinner

Thanks very much for this helpful response.

stokesley

Mr Webster is always extremely helpful and a massive asset to this forum. In fact, if I spot his name on a thread I read his words of wisdom just to see what he has to say.:o

Leslie_from_Pinner

Richard, just to clarify - is the level of insurance cover required the same as the sale price of the property, or is it some estimate of the maximum value of a claim for breach ( which I would imagine is much less assuming that the covenant is some restriction on fences or similar).

Leslie

Richard_Webster

The cover required will be that wanted by the buyer's mortgage lender. Some want it to cover the amount of the mortgage loan, others the market value of the property.

It is illogical, because as you say, it will depend on the potential loss the covenant holder or the cost of remedying the breach and that may be nothing like the value of the mortgage or the property. Unfortunately lenders make these rough and ready rules because they need a simple "one case fits all" set of rules.

In your case if you are not sure what the covenants say because they are illegible it will be more difficult to argue the figure down by reason of the contents of the covenants.

Leslie_from_Pinner

I am very grateful for your prompt responses to my questions Richard.