FTB - breaches of lease - indemnity

mahoney1975

I am close to exchange for a purpose build property that holds a share of the freehold (and thus share of the lease). The lease contains clauses that don't allow wooden floors to be exposed or alterations to the layout. Also it does not contain "reasonable" clauses for the Landlord (the Ltd management company of the freeholders). This means that if the Landlord instructs remedy of a breach of the lease, it has to be restored and you cannot contest it.

The flat has wooden flooring which is the reason I chose it and based on the lease plan it has had alterations in the bathroom and kitchen. For example the wall that separated toilet and bathroom has been knocked down to form one bathroom, which is not uncommon.

But the seller's solicitor has been delaying for weeks to enquiries and has come back the last minute before the exchange to inform me there is no consent for these and the seller was not aware as he bought the flat as is. They also changed the windows to double glazed a couple of years ago, but could not produce a Fensa certificate or consent to the enquiries. This may not be an issue as the entire building appears to have had new windows, so there must be some form of consent - which is however not there.

Now they are proposing me to have an indemnity policy for everything but I am not happy to sign while I'm placed by default in breach of more than one lease restrictions, and I will be unable to apply for consent to alterations in the future.

From what I understand by reading around it looks like this indemnity policy is considered a standard thing. On the other hand I could face the same issues with resale of the property and for all I know the policy may have lots of small print to invalidate itself in the unlikely event I have to use it. How many owners have actually claimed on these and got hustle free indemnification? What exactly will it cover in reality despite the T&Cs? And of course if I have to put things back then the flat will not be what I bought. Plus I already have to spend a fair amount of money to improve the condition of the place.

I am now proposing the seller that if they really want to go ahead quickly as agreed, they have to make a reduction to reflect remedy for the wall and floors to a potential requests by the Landlord or another owner who may decide to sue in the future. His agent is trying to fob me off and convince me it is unlikely for this to happen, but we are talking about a legal requirement here that could end up in thousands of pounds of loss for me in this "unlikely" event.

Is it so common for buyers to just get a policy and go ahead with all these breaches? Or walk away?

AndyGuil

Most flats have a wooden floor restriction on all but the ground floor. There is a responsibility to not transmit excessive noise between the flats and so wooden floors are not allowed normally.

AdrianC

mahoney1975 wrote: »

And of course if I have to put things back then the flat will not be what I bought.

That's what the indemnity policy will almost certainly cover - legal costs plus rectification/modification.

Is it so common for buyers to just get a policy and go ahead with all these breaches? Or walk away?

Doesn't matter what others may do. It's what you're comfortable with doing.

If you're happy to take the risk (and only you can weight that risk) of having these "things that made you choose this flat" taken away from you, then go with it. If they're that important to you, then walk away and thank your solicitor for doing his job better than your vendor's did when he bought it.

mahoney1975

AndyGuil wrote: »

Most flats have a wooden floor restriction on all but the ground floor. There is a responsibility to not transmit excessive noise between the flats and so wooden floors are not allowed normally.

I understand this but the point of my thread is that as a buyer I am putting an offer for "what I see" - pending enquiries.

AndyGuil

mahoney1975 wrote: »

I understand this but the point of my thread is that as a buyer I am putting an offer for "what I see" - pending enquiries.

You would have to check the fixtures and fittings to see if it was included. The solicitor will get this in writing.

mahoney1975

AdrianC wrote: »

That's what the indemnity policy will almost certainly cover - legal costs plus rectification/modification.

This remains a worry for me, I may have to chase up an insurer in the future who will not pay or go bankrupt or anything. The agents want to make their money and will always say "what could possibly go wrong". But as you say the burden and the legal will remain my liability after signing the lease. Of course anything could go wrong, but this one is different, it is a risk that I know about and willingly choose to take if I go ahead.

If they're that important to you, then walk away and thank your solicitor for doing his job better than your vendor's did when he bought it.

I'm leaning towards this option, but it is a very tough decision when it comes to buying. If it was really clear to me earlier perhaps I could make a decision easier...

mahoney1975

AndyGuil wrote: »

You would have to check the fixtures and fittings to see if it was included. The solicitor will get this in writing.

Sorry but I don't understand your point. I am talking about specific lease breaches that have arisen.

gwynlas

Go ahead with indemnity policy for peae of mind. you own share of freehold and very inlikely that other shareholders likely to demand you return flat to original condition particularly as no one knows if they have made similar internal changes. Wooden floors are very in at the moment so many others might already have them. Do you have a managing agent that you could ask?

AndyGuil

mahoney1975 wrote: »

Sorry but I don't understand your point. I am talking about specific lease breaches that have arisen.

If the floor is included in the sale, it can't be assumed you are buying what you see. If it is included then you can risk it by keeping it, or remove it. You may get asked to remove it by the people in the other flats under the terms of the lease. Wooden flooring is normally not allowed in flats. It may be ok now, as the current owner have got away with it, it seems. This may change in future.

mahoney1975

AndyGuil wrote: »

If the floor is included in the sale, it can't be assumed you are buying what you see. If it is included then you can risk it by keeping it, or remove it.

I presume you mean if "it's not included". The fittings and contents form does not explicitly state "flooring" but does state that there is no carpet in these rooms.

The wooden floor ironically appears to be the original layout of the building, but was carpeted on top. There is one carpeted room which feels and sounds like wood underneath.So the seller has either removed the carpets and sanded without consent or removed what was there and added wooden flooring.

mahoney1975

gwynlas wrote: »

Go ahead with indemnity policy for peae of mind. you own share of freehold and very inlikely that other shareholders likely to demand you return flat to original condition particularly as no one knows if they have made similar internal changes. Wooden floors are very in at the moment so many others might already have them. Do you have a managing agent that you could ask?

It is very likely that other owners may have wooden floors and are in breach of the lease. But I can't know this and I can't go forward under an informal arrangement among owners. I have to view things from the perspective of "my" liability towards the lease and I have no consent or grounds to stand on based on this lease.

For all we know, one of the owners could sell and the new owner may decide to sue me or the management company to put things back. Again another unlikely occurrence could be that someone (owner downstairs?, management company?) may request an engineer to take a view of the missing wall and decide it is not structurally ok.

What am I going to do? And what if I have to chase up that indemnity insurance and enter a legal battle out of the blue in the future? You may be right that it is very unlikely to happen, but the potential is there and I have been made aware by the solicitor. If it was just the flooring, I may have gone ahead.

Are there any examples of people who claimed and were reinstated?