Is it worth buying indemnity insurance?

cornwalltigger

We are purchasing a Victorian property and have just receiving the official copy of the register of title from the Land Registry.

It contain a covenant from 1899 basically saying we can't alter the external footprint of the property without the permission of a Mr Smith.

Our sols have said not to worry as the worse case is that we break the covenant and that Mr Smith could sue us. Given the age of the covenant he is likely to be long departed.

We've had our mortgage offer of advance issued so its clearly not a problem for the mortgage lender.

My instinct is to listen to our sol and not bother with an indemnity policy. My sols estimated this would cost around £100 if we did want to purchase one.

What would everyone else advise?

PS I should probably mention that we're expecting our first child right now so building work and extensions are not something we're planning to do!! Its more of a worry for when we go on to sell the house in years to come.

Thanks

Arthritic_Toe

Find a Mr Smith and ask his permission. There are plenty of them about. :beer:

cornwalltigger

Funnily enough, we are Mr & Mrs Smith ourselves! Not sure that it'll hold much water if I get my husband to give it the thumbs up though!

DVardysShadow

cornwalltigger wrote: »

It contain a covenant from 1899 basically saying we can't alter the external footprint of the property without the permission of a Mr Smith.

Our sols have said not to worry as the worse case is that we break the covenant and that Mr Smith could sue us. Given the age of the covenant he is likely to be long departed.

Crucial difference. Is it just Mr Smith or Mr Smith and his heirs or assigns or Mr Smith and the owner for the time being of <address>?

If it is just Mr Smith, then there is zero chance of being sued. If the benefit of this covenant is transferable there remains a tiny risk.

cornwalltigger

Ah, that's interesting point I hadn't thought of. Just checked and its "the grantor [Mr Smith], his heirs or assigns".

I guess is my question in that case is how tiny is the risk?

DVardysShadow

cornwalltigger wrote: »

I guess is my question in that case is how tiny is the risk?

Depends on location. In an urban situation, probably very unlikely. In a rural situation where familes have lived for generations, then you could consider the risk of Mr Smith living until 1940 and his grandson, still alive, knowing that the house belonged to grandfather. Whether this would then extend to him knowing about the covenant- and knowing that he inherited that covenant - and then knowing that you had done some work - and being mercenary enough to pursue the matter is another question. It still leaves it fairly unlikely.

The other relevant question is the likely consequences - you could take the view that you could buy this off for £5000 - and at a risk of 0.1%, you would not pay more than £5 for an indemnity policy.

Richard_Webster

It contain a covenant from 1899 basically saying we can't alter the external footprint of the property without the permission of a Mr Smith.

Our sols have said not to worry as the worse case is that we break the covenant and that Mr Smith could sue us. Given the age of the covenant he is likely to be long departed.

We've had our mortgage offer of advance issued so its clearly not a problem for the mortgage lender.

If the covenant only requires the consent of Mr Smith and not his successors in title to some specific area of land, then to have been party to the deed he would have to have been at least 21 in 1899 and therefore born in 1878 which would make him 133 now. Anyone know of anyone in the UK who has lived that long?

The point about the mortgage offer is however wrong. Lenders do not know about the details of the title and any offer is always conditional on the solicitor certifying the title. If there were any adverse covenants they would have to insist on an indemnity policy. In this case on the facts as stated, I would agree a policy is not needed.

GDB2222

It's not just work the present owner does. It's any work in the past, including for example double-glazing. I'd hang on to the £100, as it's hard to see what damage Mr Smith's heirs might have suffered. In other words, they might have a right to sue, and win, but be awarded only token damages.

sonastin

Tell you what - give me £100 and I'll cover the cost if you do get sued.

Oh wait, I'm not regulated so I can't offer insurance. Darn it. Because I think the risk is worth £100 in my bank account! Might be better off in yours too.

If potential buyers view it as a risk when you come to sell, get the indemnity insurance then.

GDB2222

Richard_Webster wrote: »

If the covenant only requires the consent of Mr Smith and not his successors in title to some specific area of land, then to have been party to the deed he would have to have been at least 21 in 1899 and therefore born in 1878 which would make him 133 now. Anyone know of anyone in the UK who has lived that long?

Apparently, it's Mr Smith and his heirs or assigns.

timmyt

cornwalltigger wrote: »

We are purchasing a Victorian property and have just receiving the official copy of the register of title from the Land Registry.

It contain a covenant from 1899 basically saying we can't alter the external footprint of the property without the permission of a Mr Smith.

Our sols have said not to worry as the worse case is that we break the covenant and that Mr Smith could sue us. Given the age of the covenant he is likely to be long departed.

We've had our mortgage offer of advance issued so its clearly not a problem for the mortgage lender.

My instinct is to listen to our sol and not bother with an indemnity policy. My sols estimated this would cost around £100 if we did want to purchase one.

What would everyone else advise?

PS I should probably mention that we're expecting our first child right now so building work and extensions are not something we're planning to do!! Its more of a worry for when we go on to sell the house in years to come.

Thanks

Most cheapo conveyancers will not know the law, and will advise as you have received.

the area is highly technical and has brought many major developers plans to a standstill, let aonme a private houseowner like you.

have you got an actual solicitor who has legal training in this area, or just an unqualified conveyancer? most people unwittingly get the latter for the same price as the former.

you need to have your lawyer tell you if it is a live covenant enforceable by someone. the age of the covenant is irrelvant, it is whether it imposed the covenant infavour of identifiable land. if not, you might be able to get it removed by the Lands Tribunal.