Legal Indemnity Insurance Policy

northwest1965

We are close to exchanging contracts on a property. We had a homebuyers surveys done, which all came back OK. However, there was an extension done on the property, which does not have building regs. (Our solicitor only told us this today). The Vendor is taking out a policy for this.
My main question is, what does it compensate us for?
Defects? If it starts falling down? Does it cover repairs? Do we have to get another survey done before exchanging to satisfy the insurance company?
What about if the Council want to enforce some action?
Is there compensation for reduced Market Value

Yorkie1

An Indemnity Policy protects you only against the risk of the council taking enforcement action against you for breach of BR and/or PP.

Depending on the age of the extension, it may be that the council cannot now take any enforcement action even if it wanted to - but these policies are frequently required by lenders and/or buyers.

It does not provide any protection against any defects in the construction. If the extension was done to cowboy standards and later needed repairs or started falling down, the policy won't help you at all.

The trouble is that you have no way of knowing whether they have done it to the required standard at the time but just failed to get sign-off, or whether they cut corners on aspects such as the foundations, insulation, structure etc. The only way to find out would be an invasive structural survey, which no seller is going to allow.

So, the ultimate choice is whether to accept that it is structurally etc OK or not, without having 100% reassurance.

northwest1965

Yorkie1 wrote: »

The only way to find out would be an invasive structural survey, which no seller is going to allow

.

Why wouldn't they allow it? A structural survey would check all the points you raised?

vegasbaby100

We have just gone through a similar situation and there are a few recent threads from other people. We did not want an Indemnity Insurance Policy and was already months in before it was declared to us. We decided to force the issue with the council it has taken a long time but at least we know it is all correct and the important thing to remember the surveyor will be able to tell you if it is structualy sound but are main issue turned out not to be the construction of the building but the fact that they had built over manholes without permission from the water board which took time to resolve. I would always go down the council route and i know it is un popular here but you can force that if you want to, to stop anyone else taking a policy out.

northwest1965

vegasbaby100 wrote: »

eW but the fact that they had built over manholes without permission from the water board which took time to resolve. .

The survey could not inspect the drainage chambers, as he could not see any. How do we find out where they are?

vegasbaby100

When we informed the council and they started checking they contacted the waterboard ( i believe it is part of the process) as could not see them and it was then discovered they were build over without permission.

I understand certain sellers desires for indemnity policies but the fact of the matter is that they are a poor alternative for council sign off and unless you are 100% happy for any problems that come up that you will deal with them on your own and be responsible for any issues you should get the LA to carry out the proper procedure.

I know it can take a long time nearly 6 months in our case however a large part of that was down to the seller. I would not of done anything differently.

suebfg

Hi, I am in a similar position to you OP as you will see from my recent threads. It is turning out to be a nightmare. We refused an indemnity policy as they are practically worthless - the risk of the council enforcing is negligible compared to the risk of cowboy works.

The vendor is trying to get retrospective approval - this may mean intrusive inspections and remedial work. However our surveyor is also saying we need a structural survey doing.

To add insult to injury, we have now received the vendor information forms and they had filled them in saying that no permissions/consents were outstanding - they have had previous sales fall through before exchange of contracts and they're expecting me to believe that they didn't know about this!!

northwest1965

The drainage search is back, no public sewers under the property or near it's borders.

As for the small extension. It was done in 1970. I say, if it is still standing and looks to be in good repair, it's highly unlikely anything is going to be wrong?