Indemnity insurance for adverse possession for our mortgage lender?

aeg85

Hello,

We were supposed to move in to our new house at the end of April, however when we received the title plans we noticed the land all down the side of the house (which includes access to the back garden) was missing so we raised this issue. To cut a long story short, we found the land was purchased by a previous owner but never integrated in to future sales of the house.

The current owner is now applying for adverse possession as they have lived their for 21 years and our mortgage lender stated that they valued the property and land together so it has to be included in the sale for us to continue.

We've now been informed by LR that they are doing a site survey and it will need to go to public notice which involves 65 business days. This will take us until the end of October so our sellers solicitor has drafted a bespoke indemnity insurance for their adverse possession claim for our mortgage lender to see if they will agree to let us to complete our purchase whilst they're claim is in progress.

Do you think our mortgage lender will agree to this? We're living with family atm and feel like we're imposing on them and the thought of having to wait until the end of the year is driving us crazy. Not to mention our mortgage offer will expire and porting our mortgage over will expire where we will lose over £4,000.

Any advice would be greatly appreciated, thanks.

davidmcn

aeg85 wrote: »

Do you think our mortgage lender will agree to this?

No reason in principle why not, but it depends on the terms of the policy, which we can't see from here. Lenders are generally happier than occupiers are with relying on insurance for this sort of thing, as they only care about someone making up any shortfall if they repossess, rather than the hassle of e.g. a neighbour dispute. What does your solicitor think?

davidmcn

aeg85 wrote: »

Do you think our mortgage lender will agree to this?

No reason in principle why not, but it depends on the terms of the policy, which we can't see from here. Is your solicitor happy with it?

Lenders are generally happier than occupiers are with relying on insurance for this sort of thing, as they only care about someone making up any shortfall if they repossess, rather than the hassle of e.g. a neighbour dispute.

messes

I had a similar situation with a small portion of the house being outside the LR drawn boundary line.



It was acceptable to my lender and solicitors to proceed with a sworn statement that the vendor had previously used this for X years with no restrictions/disputes etc. So that I could raise the issue with the LR in the future.



In my case the lender also decided this didn't materially affect the value. However the solicitor was able to draw up an indemnity. It wasn't cheap though.

MoneySeeker1

Have you asked the vendor for proof of this land purchase by the previous owner? What was their reply to that question?

aeg85

messes wrote: »

I had a similar situation with a small portion of the house being outside the LR drawn boundary line.



It was acceptable to my lender and solicitors to proceed with a sworn statement that the vendor had previously used this for X years with no restrictions/disputes etc. So that I could raise the issue with the LR in the future.



In my case the lender also decided this didn't materially affect the value. However the solicitor was able to draw up an indemnity. It wasn't cheap though.

Yes, this sounds very similar to our situation. They have basically put together a policy where they have stated that once adverse possession is granted, the title will be registered to us. I know our sellers solicitor spoke to a lawyer at LR who said their claim should be successful so that's good news. I just really hope they're happy to proceed!

aeg85

MoneySeeker1 wrote: »

Have you asked the vendor for proof of this land purchase by the previous owner? What was their reply to that question?

Yes we have seen the title plan and our solicitor has confirmed this as well. Also, their neighbour can confirm it too. Back in the 70's there used to be a field at the back of the 2 houses and between this house and next door there was a driveway/access to this field. A few years later this field was purchased, cordoned off with a fence and houses were built so this driveway lead to nowhere. The opportunity arose to to divide the driveway in to 2 parts for each house to purchase so they did. The reason it was never included in the sale is because this bit of land was registered as freehold to that owner and the house at the time was leasehold and the guy unfortunately passed away. The house has only become freehold this year for us to purchase it.

aeg85

Just wondering, the indemnity policy which has been drafted up will protect our lender and not us. Do you think we should be worried about this? Should we ask for cover for ourselves?

davidmcn

aeg85 wrote: »

Just wondering, the indemnity policy which has been drafted up will protect our lender and not us. Do you think we should be worried about this? Should we ask for cover for ourselves?

You should probably ask, yes. What does your solicitor say about it? I expect it makes the premium a fair bit cheaper if they only have to cover the unlikely event of a repossession.