How is building indemnity voided? How do you know?

sonastin

Its not just about you talking to the council - its also about the insurance company finding out that you've spoken to the council. If the enforcement order came through with "we have been informed of the problem by EatingGlitter and blah blah blah", the insurers would refuse to pay out. If there was an anonymous informat, you're in a grey area where they might refuse unless you can prove it wasn't you, anyone connected to you or anyone connected to the transaction. If the enforcement was carried out because of a routine inspection of the area which might have been triggered by someone talking to someone in admin about a purchase in that area, its unlikely that the insurers would pin it on you.

But then again, has anyone ever made a successful claim against one of these policies to know how insurers will react to a claim?!

G_M

sonastin wrote: »

But then again, has anyone ever made a successful claim against one of these policies to know how insurers will react to a claim?!

Interesting question! Almost worth a thread in its own right? As Richard says, they are really for Lenders' box-ticking excercise.

Does anyone ever claim? Talk about money for old rope for the insurance companies!

Richard_Webster

Problem with lenders is that we as solicitors can never talk to anyone at a lender's office who really understands the law so if we approach them on legal points we have to write and wait for a reply. They then rely heavily on what their surveyor tells them.

It would be a help if all lenders would say e.g. that we should not have to report any Building Regulation issues if the work was more than 5 yaers old and their surveyor had made no negative comments about the work - usually they just say "xxx has been carried out and solicitors should check that all necessary permissions have been obtained..." If they said "xxx has been carried out and we saw cracks which could be a symptom of subsidence...." then it would be understandable that the position should be checked thoroughly.

It is all silly because logically they should have a set of commonly accepted construction standards for mortgageability and should refuse to accept anything that is below a particular standard. This would then mean e.g. that thousands of terraced houses with attic third bedrooms, with steep twisty stairs and dodgy fire safety, which have been like that for maybe up to 100 years, ought to be reclassified and revalued for their purposes as 2 bedroom houses. I'm not saying they should do this, but the fact that they don't throws into context the stupidity of making a huge fuss about what are often quite minor contraventions in modern alterations/extensions.

I often read on this forum statements like "our lender wanted a building regulation completion certificate produced." This suggests that this was something that someone in the lender's office had stipulated in a specific mortgage condition. That can happen, but nowadays it is pretty rare. Usually it is the buyer's solicitor also acting for the lender who has to interpret the CML handbook requirements.

You have to understand that all we solicitors have is the CML Handbook - you ask the average person in a lender branch office about Building Regulations and they really wouldn't know what you were on about. It is simply a standard set of stuff we are supposed to check.

From a day to day practical point of view lenders don't want to know about all this, but if something goes wrong (e.g house repossessed and sold at a loss because of a problem) their lawyers will sit and and think about all the things they can hit the solicitor with - and that's why we have to be careful, because most of them are not prepared to say "you do not have to check [xxx, yyy, and zzz]". It is such a hassle getting them to say that they don't require a particular permission etc that it is easier, cheaper, and quicker (from buyer's point of view in terms of timescales for moving) to go for a policy, even though if we could have an intelligent conversation with someone in authority in a lender's office I would tell them usually building regulation policies are a waste of money.

Richard_Webster

Does anyone ever claim? Talk about money for old rope for the insurance companies!

Yes, someone at Norwich Union told me that they get lots of calls from house owners wanting to claim because of loss because of poor quality work etc and they waste a lot of time patiently explaining that the policy doesn't cover this! So they factor that into what they charge for them!

sonastin

Can indemnity insurance actually cover anything anyway? I mean, the losses that can come from enforcement from the council are:
1) the fines imposed for breach of building regs. I thought that you could insure against fines - you had to pay the penalty from your own pocket?
2) the cost of putting right the work so that it does satisfy the building regs - but the insurers won't pay out on that until the council get involved and I can see them still classifying it as the loss arising from poor quality work so not their problem.

So what does indemnity insurance actually offer (other than a tick in a box for a mortgage lender)? Or have I got that bit wrong about insuring against fines?