Restrictive covenants and indemnity

Dakespaul

There is a 13yr old restrictive covenant on a property I am purchasing that restricts you from converting the loft space. The beneficiary of the covenant is still living next to the property. I have been advised that there is a possibility to take an indemnity policy that would cover any future breach should we go ahead and convert the loft. Does anyone have experience of a policy of this nature to cover for a Planned breach in the future?

AnnieO1234

I would say you would be extremely unwise to proceed further with the situation as you've explained it. This is someone who has obviously had that covenant in place so that their own home is not overlooked/disturbed etc by such an alteration.

I would be running from this very, very quickly. It is highly likely that the person will seek to enforce the covenant.

xxx

dc197

Indemnity policies usually cover historic breaches against future claims. What you plan is to try to indemnify yourself against being discovered in what you plan to do. I dont know whether anyone would issue such a policy.

davidmcn

dc197 wrote: »

Indemnity policies usually cover historic breaches against future claims. What you plan is to try to indemnify yourself against being discovered in what you plan to do. I dont know whether anyone would issue such a policy.

They certainly exist, in principle - developers get them all the time. But whether available at a reasonable premium where the covenant is relatively modern, and enforceable by the next door neighbour, is another question.

moneyistooshorttomention

I always understood these indemnity policies are taken out because of some "historical" thing and against a very very low risk of the person falling foul of a claim.

Typical example - someone told me they've had to take out an indemnity policy because no-one knows who owns the road near them and they need that road for access to their garage. Another example - I was advised by my legal executive to take out Chancel insurance in the very unlikely event it was found that the Church of England might be able to hold me liable towards their repair costs.

These are both hugely unlikely events.

Your thing - ie converting the loft will absolutely definitely have the beneficiary of that covenant hammering at your door complaining visibly if you were to try doing that. It's not a "very unlikely possibility" - it's an "absolute definite certainty". They did that covenant to protect themselves against building works next door - and they are still living in that house.

Bar them having turned "deaf and daft" subsequently - they will be after your guts for garters if you try converting that loft. Any solicitor/legal executive/whatever is highly likely to refuse to even consider you for such a policy the second they've ascertained the answer to the question as to who is the beneficiary of that covenant.

Richard_Webster

When developers apply for policies to cover work they haven't started the insurers usually want them to apply for plannning permisdsion which genrally invovles public advertisement. If there are no objections or the objections don't mention the covnenats then the insurers will consider issuing a policy.

If people object on the grounds of the covenants the Council will ignore those objections in planning terms, but then the objectors might try to use the courts to enforce the covenant (if they are entitled to do so). Insurers don't want to take that risk.

In this case the covenant is not that old, the person who can enforce still lives next door and planning permission might not be needed fo such a conversion, so no advertising might be necessary. Possibly the neighbour might have to be notified under the Party Wall Act depending on the nature of any proposesd works in the attic. Fort all the reasons I really cannotsee an insuer being prepared to issue a policy in this case.

MataNui

Not in this case. There is no possibility of you getting an indemnity. Why are you even considering buying a house with a covenant that you seem to have every intention of breaking? If you buy this house and convert the loft while the beneficiary of the covenant is still living next door you will without doubt find yourself on the losing end of a court case with large bill for legal fees plus reversing any work you may have done.

If you think this place may be too small without the option of converting or you are looking for somewhere you can convert then this place is definitely not for you.

EmmyLou30

Even if you did get an indemnity policy, it'd only cover your costs to undo the loft conversion. It's not some magical thing that allows you to just do as you please and breach covenants.

Dan-Dan

You cant insure against a certain event, can you?

antrobus

Dan-Dan wrote: »

You cant insure against a certain event, can you?

Oh I don't know. Have you never come across over 50s life insurance?

However I would expect that the cost of buying such insurance would, hypothetically, probably be greater than or equal to the likely value of any future claim.

I say 'hypothetically' because there must be a limited number of twonks even considering the possibility of purchasing insurance in such circumstances, and with such a small market, no insurer is likely to be interested in offering such cover.

davidmcn

Dan-Dan wrote: »

You cant insure against a certain event, can you?

It all depends how much you are prepared to pay for it - some insurances are for things which are quite likely to happen e.g. outdoor events being rained off.