Need a Defective title insurance

Chris_P_2

Have just had this through from our solicitor for the house we are buying (we were meant to exchaneg last friday so its a bit cute this has only come to light now). The Policy was only dated 2 weeks ago. Should I be worred, and what else should I ask?: From what i can tell the property was extended but permission was not obtained from the previous owner - but as said owner was a ltd compnay that no longer exists this shouldnt be a problem??


I believe that you need to have in place a defectivetitle insurance policy to cover the fact that



a) Alterations have beenmade to the property in breach of the restrictive covenants in the deeds



The proposed policy is with Zurichand the one off cost ofthe policy has already been paid by the previous owners.



The policy has certainrestrictions and I enclose a copy of the terms. I would like to highlight that you must not be aware of any claimagainst the property at the moment and you must not communicate theexistence of this policy to any neighbour or other interested party as this mayinvalidate the policy.



The benefit of anyinsurance will pass to any subsequent owner of the property but in the event ofany claim then damages would be assessed at the difference between the marketvalue of the property with the defect against the market value of the propertywithout the defect.



The insurance policy is not a substitute for not havingthe defect in the first place, and you must appreciate that the insurance willonly compensate you for monetary loss and not the anxiety and worry of a claimbeing made and perhaps the property not being able to be used as you mightwish. An alternative is to try andresolve the defect at this stage but this will invariably take a long time andyou will incur considerable additional fees, which may make the transactionunacceptable. The title insurance is thecost effective and swift alternative.



If you are happy toproceed with the above policy, please sign and return the enclosed copy of thisletter.

Land_Registry

If the policy relates to a breach of the registered restrictive covenants then it is perhaps unlikely to solely relate to the lack of consent from the previous owner - you would need to check the actual covenants to see
a) what has been breached and
b) who has the benefit of those covenants - most likely to be neighbouring landowners.

Restrictive covenants bind the land/property and the benefit will pass from owner to owner. The main issues posted in previous threads relate to how likely it is that the benefiting owners are both aware and willing to pursue their enforcement.

https://forums.moneysavingexpert.com/discussion/4510113 is a previous thread which may be of some interest/benefit.

However we would always recommend taking and following legal advice. Other posters will I am sure offer a view but it may help them to do so if you posted the actual covenant and explain how it has been breached

princeofpounds

You need to understand the covenant and you need to understand how it was broken.

In many of these instances the chances of the beneficiary of the covenant actually coming along and trying to enforce them are vanishingly small. They may not exist any more, may not care, may not be aware they have this covenant in place. The fact the LTD company has dissolved makes this more likely but there may be a successor beneficiary you so it can never be totally discounted.

Often covenants like that are put in place by developers who want to control certain aspects of the area whilst they finish off their development and sell the rest of the properties on. Nothing makes a house harder to sell than an extension building site on the boundary Typically they then don't care afterwards.

However the mortgage company (who the solicitor will also act for) may well require the insurance as they are not in the business of taking any risk besides your credit.

I've not faced something like this myself, but I don't think it's too out of the ordinary