Chancel liability insurance

BB.

G-M and eddddy, thanks for your replies. My solicitor is not from the "internet conveyancing warehouse". I found them by going through the list of Virgin Money approved conveyancers and they are based near me (not that I am going to meet them probably).


I will probably go with their quote since there is a risk they charge me extra to check my policy. But I will ask them if I can arrange it myself first and call the Chancel search company directly to see if I can take the same policy quoting the same customer number.

G_M

Let us know how you get on.....

BB.

da_rule wrote: »

Because you're not just getting insurance to protect yourself but also the lender.

The solicitor has to act in best interest of the lender, therefore if you supply your own policy they have to check it (and guess who's picking up that bill).

Also, do you know exactly what type of cover your lender is willing to accept? Do you know exactly what lender details (as in company name/address etc) need to be noted on the policy? Your solicitor does.

Can I make a point that building insurance which consists of many more important clauses and conditions to be met yet is selected and arranged by the buyer despite much higher risks of it actually being claimed on. And it also protects the lender as well as the owner.

Your responses although appreciated and helpful to a certain degree do seem to be rather subjective. Perhaps you are a conveyancer yourself.

Maybe £100 to you is nothing but it is a lot to me. This is not my first purchase and hopefully not the last and I will protect my own interests to the best of my abilities every time I go through this process. No one else will.

It seems that there are a lot of industry experts on this forum. Which is obviously good but sometimes it would be nice to hear from other fellow buyers who have been through the mill of buying a property and are happy to share their views and provide a bit of encouragement and support...

I live and hope...:D

G_M

BB. wrote: »

Can I make a point that building insurance which consists of many more important clauses and conditions to be met yet is selected and arranged by the buyer despite much higher risks of it actually being claimed on. And it also protects the lender as well as the owner.

In most cases, conveyancer use the Standard Conditions of Sale 5th edition for the sales contract. This places the risk on the buyer from the point of Exchange of Contracts., so a buyer should insure from that date.

Solicitors will advise their clients to do this.

Where a mortgage is involved, and (as is usual) the solicitor is also acting for the lender, he will not just advise, but will insist that the buyer insures from that point, and will require sight of the policy so that he can ensure it meets the lender's requirements.

The cost of this work is included in the conveyancer's standard fee for acting for the lender, because it is always required, unlike the chancery insurance which is only sometimes required, and so is extra work.

As in any walk of life, there may be a few instances where the solicitor 'let's things slide' and doesnot require this, but I've never come across this. Indeed this forum regularly see queries from buyers asking 'Why is my solicitor demanding to sees the insurance and how to I set it up when I don't know the Exchange date?'

(not a conveyancer though I have been a buyer....)

da_rule

The point I have been trying to make is that you can arrange your own insurance.

However, as this is a relatively niche type of insurance (and not normally something that would be obtained by anyone other than a solicitor/conveyancer) the solicitor needs to check that it protects the interests of you and the lender.

Obviously if you buy it you're saying that you're happy with the level of the cover. However, your lender will have criteria for the insurance. If the solicitor has arranged the insurance he will know that this criteria is met, if he hasn't arranged it he won't know this. He will therefore have to satisfy himself that the criteria have been met and the policy is in the best interest of the lender. The only way he can do this is by reading the policy documents. For Virgin Money it is in the Council of Mortgage Lenders handbook (https://www.cml.org.uk/lenders-handbook/englandandwales/virgin-money-plc/question-list/ - particularly points 9.1 & 9.2) that the solicitor has to supply them a copy of the policy after completion and also approve the policy. If you supply your own policy then the solicitor will charge you a fee for reading and approving the policy you supply.

The solicitor could also, having read the policy (and charged you for the privilege) decide that it is not sufficient and refuse to approve it.

As you say, this is a money saving forum, and many people have been helped with DIY conveyancing. However, as soon as a lender is involved this becomes much more difficult as they will insist on using a solicitor who will insist on reading and checking everything. Also, I see no way that you'll come of this financially ahead, the solicitor is not just going to take your word for the fact that the policy is good enough. They will have to check it and they will charge you for doing so. You are also running risks that they refuse to approve it and you'll be further out of pocket.

You mention buildings insurance. The risks involved are slightly different. Buildings insurance that's in place between exchange and completion protects you, and you alone. If the day after exchange the house fell down, you could be compelled to complete on what is essentially a pile of rubble. The mortgage would be cancelled so you'd have to buy as a cash buyer (unless you could find another mortgage), which would be covered by the insurance policy. After completion the policy protects you and the lender, and there will be a contractual clause in place that states that you must maintain a level of insurance during the life of the mortgage. If the day after completion you cancel the policy or you just forget to renew it one year and something happens then the mortgage company can pursue you personally for the money owed.

Chancel insurance is slightly different in that it protects both parties against financial charges rather than loss of security. If you receive a chancel repair bill but you cannot be found (left the property) then the mortgage company will be liable to pay it. And as it's unknown how much that bill may be, either they need to know about and approve the potential costs in advance of providing the mortgage funds or there needs to be an insurance policy to protect against the risk.

And just for your information I have been through the mill of property buying. However had I come across anything like chancel repair liability, or something that required defective title insurance or the requirement to undertake a less frequent search such as a mining search then I would of taken the advice of my solicitor. I am more than confident that I could sort it myself however, the solicitor has the time and resources to sort it out (I'd rather spend my free time doing my own stuff than sorting out insurances etc). Also, I'm not just paying them to sort it out for now, I am also paying them to ensure that if something goes wrong in the future because of something they did that I can claim against them. If something goes wrong because of something that I did/arranged then I have to bear the brunt of any liability therefore I would much rather pay someone else to take the liability away from me.

BB.

G_M wrote: »

Let us know how you get on.....

Hi G_M

I asked my solicitor and she said I can arrange the cover directly with the company that did the search. The cover cost is £44 (they said they don't know where my solicitor took £23 from) and can be transferred onto future owners so when it comes to selling the property the buyers won't have to worry about it.

Result! :j:T

bobobski

OP, your solicitor should have advised you that the law changed a few years ago and insurance is no longer necessary in most cases. Assuming the property is registered but the chancel repair liability is not noted on the title, the liability loses priority against you as the new registered proprietor. In this (very common) situation, insurance is literally a waste of money as the chancel repair liability cannot be enforced.

I strongly suggest you check this with your solicitor before purchasing. See here, for example: http://www.trowers.com/uploads/Files/Publications/2013/Bulletins/How_the_chancel_repair_liability_changes_will_affect_you.pdf.

Also, I work on properties which have potential chancel repair liability, where the buyer does not take out insurance and where the lender does not care. It would surprise me if the lender insists on this; usually lenders have decent solicitors who know the law!

da_rule

boboski - your link is broken, is this it: http://www.trowers.com/uploads/Files/How_the_chancel_repair_liability_claims_will_affect_you.pdf

There is also a more recent one: http://www.trowers.com/uploads/Files/Jargon_busting_for_whom_the_bell_tolls.pdf

BB.

I've done my research on this and the opinions are still divided despite the change in law. Plus I value my time enough to not to get involved in an argument with my solicitor at this late stage of the transaction.

Btw, the link you posted does not appear to work.

Thanks anyway.

da_rule

BB.

Well done on winning - it's a surprise to say the least!

I would assume that if your solicitor is insisting on the insurance there must be a reference to it on the title register.