Restrictive covenants requires indemnity insurance

smudge2013

We are buying a house and our solicitor has asked the sellers solicitor for the plan to the deeds from the 1980s, as it is referenced by the list of restricted covenants. The sellers side are unable to find this plan, and have not had any luck trying to find it by checking with previous solicitors or HMLR. Therefore to mitigate the risk (for our lender at least), we need an indemnity insurance policy for £250.

Bearing in mind this is only required because the seller (or their previous solicitor) seems to have lost the plan, does it seem fair to ask the seller to pay for the policy?

martinsurrey

The seller does not require an indemnity policy, you do.

Of course you can ask, but its your lender being a pain, not the vendor.

G_M

martinsurrey wrote: »

The seller does not require an indemnity policy, you do.

Of course you can ask, but its your lender being a pain, not the vendor.

?????

As we know nothing about these restictive covenants, how can you say the lender is being a pain? The lender is being cautious, and that caution may well be justified.

It seems perfectly fair to ask, even demand, the seller pay for the policy since it is they who have failed to provide a relevant document relating to the property's title.

davidmcn

Difficult for us to know how important the plan or the covenant is - do you know exactly the risk is, OP?

JimmyTheWig

It was a cost you weren't expecting when you put in the offer, so perfectly reasonable to expect the seller to pay for it.
But it's all negotiation at this point. Until you exchange contracts nothing's set in stone. If you say you want them to pay and they say no, what happens? Will you walk away from the purchase?

Ithaca

We had a similar case when we bought last year. The deeds were all dated 2 July 1963 but there was one reference to a document dated 2 July 1936. Clearly just a typo but our solicitor (representing the lender) pointed out there was a non-zero chance that there was indeed a document from 1936 that could be relevant to the sale so we ought to have an indemnity policy in place (paid for by the vendors).

Our vendors' solicitor was adamant it was pointless for them to pay for an indemnity policy for a document that never existed, so we ended up stuck for a couple of weeks.

In the end we agreed privately with the vendors that to push things along we would instruct our solicitor to take out an indemnity policy for £200 and that after the sale was completed they would stick £200 in an envelope and drop it round. We took the view that (1) spending £200 to finalise a £450k house sale was a price worth paying, and (2) it means that if we ever come to sell the house we can pass the policy on with the deeds and it avoids having the argument all over again.

martinsurrey

G_M wrote: »

?????

As we know nothing about these restictive covenants, how can you say the lender is being a pain? The lender is being cautious, and that caution may well be justified.

It seems perfectly fair to ask, even demand, the seller pay for the policy since it is they who have failed to provide a relevant document relating to the property's title.

sorry, you are right, I jumped a bit too high, I just find pretty much every indemnity insurance to be a scam, I struggle to find a story of a successful claim against a policy.

G_M

martinsurrey wrote: »

sorry, you are right, I jumped a bit too high, I just find pretty much every indemnity insurance to be a scam, I struggle to find a story of a successful claim against a policy.

In general I agree - most policies are pointless (especially the Building Regs/Planning ones).

And this one may be pointless - but we need to know what the document/covenant says and what the risk is.

smudge2013

davidmcn wrote: »

Difficult for us to know how important the plan or the covenant is - do you know exactly the risk is, OP?

There are a list of covenants such as rights of access on a shared driveway, which then refer to the plan (I suppose to illustrate the point). Chances are the risk of not having the plan document is minimal, but of course to a lender it doesn't matter how small the risk is, they will insist on indemnity insurance.

smudge2013

Ithaca wrote: »

We had a similar case when we bought last year. The deeds were all dated 2 July 1963 but there was one reference to a document dated 2 July 1936. Clearly just a typo but our solicitor (representing the lender) pointed out there was a non-zero chance that there was indeed a document from 1936 that could be relevant to the sale so we ought to have an indemnity policy in place (paid for by the vendors).

Our vendors' solicitor was adamant it was pointless for them to pay for an indemnity policy for a document that never existed, so we ended up stuck for a couple of weeks.

In the end we agreed privately with the vendors that to push things along we would instruct our solicitor to take out an indemnity policy for £200 and that after the sale was completed they would stick £200 in an envelope and drop it round. We took the view that (1) spending £200 to finalise a £450k house sale was a price worth paying, and (2) it means that if we ever come to sell the house we can pass the policy on with the deeds and it avoids having the argument all over again.

Thanks for sharing your story - it's useful to hear how other people have dealt with a similar issue.

westernpromise

martinsurrey wrote: »

The seller does not require an indemnity policy, you do.

Of course you can ask, but its your lender being a pain, not the vendor.

By this reasoning, if you bought a place and before you exchanged the roof had fallen in, you should pay for its repair because the seller won't be requiring a roof.