First time buyer - indemnity insurance question

confused81

Hi there,

I am a first time buyer looking to buy a leasehold flat in London. 4 months have passed since my offer was accepted because our solicitors have been going back and forth on various issues...

The first issue was that the head lease (the management company for the block of flats) is shorter than the individual lease on the flat I'm looking to buy. Apparently there is legislation that says that the head lease is 'deemed to be' extended - I may be getting phrases wrong, forgive me! This would have been fine but unfortunately when the individual lease on this flat was extended recently, a small number of clauses were missed out of the lease which meant that at the end of the head lease period (assuming it isn't extended in the meantime) no-one would be responsible for the maintenance or buildings insurance relating to this flat.

These missing clauses were obviously an error and an attempt was made to ask the freeholder to sign a deed of variation to effectively add them to the lease. All other flats in the building have these clauses included in their lease. The freeholder refused. I don't know what the reason was for refusing, presumably because they would prefer to be paid to sign it?

Anyway, this leaves us in the current position which is that my solicitor and the vendors' solicitor have agreed indemnity insurance that will cover me, the bank and is transferable to future owners of the flat.

Being a first time buyer I have a few concerns and questions...

If I move in and the owners of each of the flats look to extend the management company lease I will be part of that group and will have to pay my share. In other people's experience, how much can these things cost? This would help solve any problems to do with this issue when I come to sell but I need to know what sort of financial impact this will have.

My bank accepts the indemnity insurance to cover me and them but what if the lender of a future buyer doesn't accept it and considers the title defective? Is this likely? I am worried that as banks have become stricter on lending recently they may continue to do so and my situation when selling a few years down the line could be even worse than it is for the current vendors!

I'd really appreciate any advice or suggestions anyone can give. Indemnity insurance is probably very common and acceptable but I just want to be clear what risks I am taking on by buying this property.

If anything isn't clear about the situation outlined above please just ask and I'll happily clarify if I can!

Thank you!