Forfeiture of Lease insurance

adbar

Hi,
I am in the process of moving from a leasehold flat to a house. Our buyer's solicitor has asked that we buy indemnity insurance against future forfeiture of lease if the ground rent goes up. The insurance quote we have been given is for "Forfeiture of Lease (Bankruptcy/Insolvency) Insurance". It is specifically for forfeiture due to bankruptcy and says:

"What is not insured?
Claims arising from:
Forfeiture due to breach of any provision in the lease, other than relating to the bankruptcy of the lessee."

Is it reasonable for us to be expected to pay for this? Surely it is not our responsibility if the buyer goes bankrupt and can't afford to pay the ground rent after it goes up in five years time and if necessary it should be bought by the buyer?

thanks.

sal_III

It's the first time I'm hearing of such insurance, yet alone being required by the buyer. Does it even exist? Ground rent increase would only lead to lease Forfeiture if the leaseholder fails to pay the ground rent. Since the ground rent increase terms are clearly outset in the lease, and payment or non-payment (as well as all other lease covenants are in control of the leaseholder I really don't see where an insurance event could occur, outside of bankruptcy.

Did you as your solicitor of his opinion on the matter?

G_M

Ask you solicitor to explain why he thinks it is reasonable for you to pay this. If indeed he does.


Or simply refuse and let the buyer decide what to so.



The only rationale I can think of is if the ground rent is not clearly specified in the lease, which is very unusual.

eddddy

adbar wrote: »

I am in the process of moving from a leasehold flat to a house. Our buyer's solicitor has asked that we buy indemnity insurance against future forfeiture of lease if the ground rent goes up. The insurance quote we have been given is for "Forfeiture of Lease (Bankruptcy/Insolvency) Insurance". It is specifically for forfeiture due to bankruptcy and says:

"What is not insured?
Claims arising from:
Forfeiture due to breach of any provision in the lease, other than relating to the bankruptcy of the lessee."

It sounds like you're talking about 2 different indemnity insurances.

• 1. Forfeiture of Lease - due to non-payment of ground rent. (I'd guess the ground rent is capable of going over £250 outside London, or over £1000 within London.)

• 2. Forfeiture of Lease - due to leaseholder insolvency or the leaseholder being made bankrupt (Because a clause in the lease says that the lease is forfeited in those circumstances.)

The buyer's mortgage lender probably requires these. There are no 'rules' about whether the buyer or seller pays for these.

Do you know how much they will cost (including the solicitor's arrangement fees)?

If you refuse to pay for them (so the buyer has to pay), do you think that would make the buyer walk away?