Indemnity Insurance on older work despite recent work

willoftw

Hi Everyone,

Bit of a tough one here, we are purchasing a property that had some extension work in the 70’s. Planning permission was obtained but no building regs sign off can be found. The seller had an indemnity policy drawn up for just this reason. Recently the seller has had further work done to a totally different part of the house, had the relevant planning permission and building regulations signed off a few months ago.

Now, my understanding is that this has now invalidated the existing policy. The simplest option is to simply get a new policy, but will the fact that recent work has been done and signed off by the local authority recently stop this from happening? Even though it’s on a completely separate part of the house?

We are worried that such a small detail, in which the seller has done what is arguably the right thing, would be stopping us from moving forward with the purchase.

I have no doubt over the quality of the work, we’ve had a full structural survey. It’s just a condition of our mortgage that all extension works must have building building regs, or an indemnity policy. If we are blocked from getting an indemnity policy, all be it a useless one, we would have to go back to the lender and let them know we are proceeding without indemnity, who would potentially down value the property?

davidmcn

There's absolutely no point worrying about the compliance or otherwise of something built in the 70s (after all, what's the paperwork like for the older parts of the house?). In fact I wouldn't get very excited about anything from the 20th century.

FreeBear

willoftw said: We are worried that such a small detail, in which the seller has done what is arguably the right thing, would be stopping us from moving forward with the purchase.

The "small detail" will not prevent you from completing the purchase. A solicitor may well try to sell you or the vendor another indemnity policy, but it would just be a waste of money. If the council were going to take any enforcement action, it would have been back in the 1970s. They are way too late to do anything about it now.

willoftw

Thanks for the replies. I have no doubt over the quality of the work, we’ve had a full structural survey. It’s just a condition of our mortgage that all extension works must have building building regs, or an indemnity policy. If we are blocked from getting an indemnity policy, all be it a useless one, we would have to go back to the lender and let them know we are proceeding without indemnity, who would potentially down value the property?

Semple

As above, way too late for any enforcement action. Its also been standing for 50 years, so can't be any concerns about the workmanship. 

davidmcn

willoftw said:

It’s just a condition of our mortgage that all extension works must have building building regs, or an indemnity policy. If we are blocked from getting an indemnity policy, all be it a useless one, we would have to go back to the lender and let them know we are proceeding without indemnity, who would potentially down value the property?

What, no matter the age of the extension? Which lender is this, and what exactly does the condition say? No, the lack of an indemnity policy will not "downvalue" the property, because nobody with any sense would be expecting paperwork for a 1970s extension.

Thrugelmir

Lenders only concern is that the property provides adequate security for the money advanced. A couple of hundred pounds is peanuts when put in context of the thousands that the lender is potentially risking. Like all insurance it's a pooled risk.  Which is where the lender is coming from. All round it's the quickest and cheapest option to pursue. 

davidmcn

Perhaps there is something unusually specific in the OP's lender's requirements, but generally lenders rely on the solicitors following the standard instructions in the CML Handbook, and the relevant section says:

5.5.1 You must by making appropriate searches and enquiries take all reasonable steps (including any further enquiries to clarify any issues which may arise) to ensure:

• the property has the benefit of any necessary planning consents (including listed building consent) and building regulation approval for its construction and any subsequent change to the property and its current use; and
• there is no evidence of any breach of the conditions of that or any other consent or certificate affecting the property; and 
• that no matter is revealed which would preclude the property from being used as a residential property or that the property may be the subject of enforcement action.

If there is evidence of such a breach or matter but in your professional judgment there is no reasonable prospect of enforcement action and, following reasonable enquiries, you are satisfied that the title is good and marketable and you can provide an unqualified certificate of title, we will not insist on indemnity insurance and you may proceed."

(my emphasis) - I can't see any solicitor arguing there's a reasonable prospect of enforcement action after 40+ years.

willoftw

davidmcn said:

Perhaps there is something unusually specific in the OP's lender's requirements, but generally lenders rely on the solicitors following the standard instructions in the CML Handbook, and the relevant section says:

5.5.1 You must by making appropriate searches and enquiries take all reasonable steps (including any further enquiries to clarify any issues which may arise) to ensure:

• the property has the benefit of any necessary planning consents (including listed building consent) and building regulation approval for its construction and any subsequent change to the property and its current use; and
• there is no evidence of any breach of the conditions of that or any other consent or certificate affecting the property; and 
• that no matter is revealed which would preclude the property from being used as a residential property or that the property may be the subject of enforcement action.

If there is evidence of such a breach or matter but in your professional judgment there is no reasonable prospect of enforcement action and, following reasonable enquiries, you are satisfied that the title is good and marketable and you can provide an unqualified certificate of title, we will not insist on indemnity insurance and you may proceed."

(my emphasis) - I can't see any solicitor arguing there's a reasonable prospect of enforcement action after 40+ years.

Our solicitor is saying that by recently getting regulations sign off, has meant any indemnity policy cannot be taken out, and he cannot advise us or the lender to proceed forward without those regulations? Should I just argue with our solicitor? He’s saying we will have to write to the lender informing them of the situation.

davidmcn

willoftw said:

davidmcn said:

Perhaps there is something unusually specific in the OP's lender's requirements, but generally lenders rely on the solicitors following the standard instructions in the CML Handbook, and the relevant section says:

5.5.1 You must by making appropriate searches and enquiries take all reasonable steps (including any further enquiries to clarify any issues which may arise) to ensure:

• the property has the benefit of any necessary planning consents (including listed building consent) and building regulation approval for its construction and any subsequent change to the property and its current use; and
• there is no evidence of any breach of the conditions of that or any other consent or certificate affecting the property; and 
• that no matter is revealed which would preclude the property from being used as a residential property or that the property may be the subject of enforcement action.

If there is evidence of such a breach or matter but in your professional judgment there is no reasonable prospect of enforcement action and, following reasonable enquiries, you are satisfied that the title is good and marketable and you can provide an unqualified certificate of title, we will not insist on indemnity insurance and you may proceed."

(my emphasis) - I can't see any solicitor arguing there's a reasonable prospect of enforcement action after 40+ years.

Our solicitor is saying that by recently getting regulations sign off, has meant any indemnity policy cannot be taken out, and he cannot advise us or the lender to proceed forward without those regulations? Should I just argue with our solicitor? He’s saying we will have to write to the lender informing them of the situation.

Unfortunately it seems you've appointed an idiot as a solicitor. If he thinks he needs to seek instructions from the lender then I suppose it'll be simplest to let him do that.

As I alluded to above, how old is the rest of the house, and what paperwork has he seen for its original construction?

alt80

Absolutely no chance of enforcement. Your lender's valuer is assessing the value of the security and is ultimately only interested in anything that will affect the market value of the security - a 1970s extension unless there's some kind of obvious structural fault apparent on valuation will most likely not affect market value. This is assuming a physical valuation has actually been done (doesn't always happen).

No need to buy any additional indemnity policy in this case, imo. Who is the lender?

[Chartered Surveyor/ Valuer doing this sort of work everyday]