Need for Indemnity Insurance?

McTaggus

The sellers submitted a pre-application for the conversion of the property back into two dwellings a number of years ago, within which the Council confirmed that the prior conversion of two properties into a single dwelling was therefore considered lawful and that planning permission would be required to covert into two again….

dc197

McTaggus wrote: »

because the work was completed more than 4 years ago, the works have been considered lawful

This is subtly wrong.
It's not that it becomes lawful, it's that it becomes immune from action.

McTaggus

dc197 wrote: »

This is subtly wrong.
It's not that it becomes lawful, it's that it becomes immune from action.

Thank you for the clarification! Apologies, I was going by the wording the Council included in the pre-application response, which stated this was considered a lawful conversion

Hoploz

What does your lender say?

Sometimes in these cases it's not really the buyer or the seller who feel these (pointless) policies are necessary, but it is that the lender refuses to proceed unless all paperwork is in place. This can be the sticking point.

McTaggus

My lender hasn't said anything at all about this.

davidmcn

Hoploz wrote: »

What does your lender say?

Sometimes in these cases it's not really the buyer or the seller who feel these (pointless) policies are necessary, but it is that the lender refuses to proceed unless all paperwork is in place. This can be the sticking point.

McTaggus wrote: »

My lender hasn't said anything at all about this.

They probably won't have said anything specific (or even be aware of the issue) but they will have issued their standard instructions to your solicitor, which requires the solicitor to certify that there are consents or appropriate indemnity cover where appropriate for any alterations etc.

melstar11

Our lender wants one for a window. We said we weren't bothered - if there had been a FENSA guarantee it would be near expiry, but the solicitor is acting for the mortgage company too so it's a requirement.

McTaggus

So, in this instance, there is no enforceable action that the Council can take. We have said from our perspective we don't need it as reassurance.

However from the Council of Mortgage Lenders Handbook it states "If there is evidence of such a breach or matter but in your professional judgment there is no reasonable prospect of enforcement action and, following reasonable enquiries, you are satisfied that the title is good and marketable and you can provide an unqualified certificate of title, we will not insist on indemnity insurance and you may proceed."

As such, it would appear this all comes down to our solicitor's professional judgement on whether it needs to be considered a risk to mitigate for the lender…… we'll see what she decides on Monday…. Regardless, not passing on the cost to the buyer.

McTaggus

So, asked the solicitor today what commission she earned from indemnity insurance sales and said that we were satisfied we were happy with the risk, and made reference to the Council of Mortgage Lenders handbook to ask her to provide her professional judgement - and she replied instantly to say it was unnecessary but ducked the question in relation to commission or fees….. Interesting outcome! Lender doesn't require it at all, despite her protestations to the contrary during our meeting yesterday….

G_M

From reading posts on the forum here over the years, my impression was that an indemnity policy costs around £150, not £500.

And that often it is the mortgage lender (on the advice of their solicitor) who demands it. But if their solicitor says it's your choice, then personally I feel it's unecessary.