Adverse Possession Insurance

RJ1129

We found our dream house, offer accepted now 3 months down the line we have found out that part of the building (Utility room and 2 en suites) have been built on our neighbours land.  They have provided an Adverse Possession Insurance policy and a declaration that they have used the land since they purchased it in 2001.   There have been no objections from the owner of the neighbouring land and we are now debating what we should do.  Has anyone been through this?  Is there anything else that we should obtain to help us make up our minds.  
Thanks

davidmcn

What's your solicitor's advice? 

Mickey666

A few things spring to mind:
If they have a valid claim for adverse possession then why have they not registered their claim with Land Registry after 19 years?  Could you insist they do this as part of the conveyance so that you are not taking on the risk?
What does the 'adverse possession' insurance policy actually provide?  Insurance is not usually possible for a known event and the adverse possession is clearly known about.  Or perhaps it's not known about by the owner of the land that has been adversely possessed and the insurance is to cover the costs of any potential future claim? 
What has your solicitor advised?

davidmcn

Mickey666 said:

Or perhaps it's not known about by the owner of the land that has been adversely possessed and the insurance is to cover the costs of any potential future claim? 

Yes, that would be what it's for. 

Mickey666

Insurance or not, a future claim could be messy, time-consuming and stressful.  On the face of it, after 19 years an adverse possession claim should be a strong one, in which case why not get the seller to make the claim before selling?
https://www.lawble.co.uk/adverse-possession/

davidmcn

Mickey666 said:

Insurance or not, a future claim could be messy, time-consuming and stressful.  On the face of it, after 19 years an adverse possession claim should be a strong one, in which case why not get the seller to make the claim before selling?
https://www.lawble.co.uk/adverse-possession/

Possibly because the insurer may regard that as "rocking the boat" and refuse to continue cover. 

Mickey666

Possibly, but I can't see how an insurance policy can protect against an adverse possession claim failing - ie, if the claim fails for some reason (after all we know little of the details) and the landowner wants their land back, what then?  Presumably the house owner would have to demolish the parts of the house built on the landowner's land.  No doubt the insurance policy could compensate the house owner for such disruption and loss of value but I'm not sure it could FORCE the landowner to settle with the house owner.  After all, that's what land titles are all about - absolute titles that cannot be taken away without very good reason.
Adverse possession is certainly one reason for transferring a title, but it has not yet been tested in this case.  It might succeed or it might fail, we just don't know, so the OP will be taking a risk by buying into such a situation and while the insurance policy might well protect them from financial loss are we sure it can protect them from physical loss of the land - and the part of the house on which it is standing?

davidmcn

Mickey666 said:

Possibly, but I can't see how an insurance policy can protect against an adverse possession claim failing - ie, if the claim fails for some reason (after all we know little of the details) and the landowner wants their land back, what then?  Presumably the house owner would have to demolish the parts of the house built on the landowner's land.  No doubt the insurance policy could compensate the house owner for such disruption and loss of value 

Yes, ultimately that's what it would do. Obviously, the risk of a legal owner suddenly turning up is pretty remote, and even if they did, they're more likely to want some cash to sell their interest rather than actually evict the OP. 

RJ1129

Thank you all for taking the time to respond.  Ideally we would like the seller to sort this out before we buy, but as stated this would bring the owners attention to the issue and the insurance would become void.  We think that we will wait until we see the Statutory Declaration from the seller outlining their case for Adverse possession and consult a specialist Land Lawyer.

Mickey666

davidmcn said:

Mickey666 said:

Possibly, but I can't see how an insurance policy can protect against an adverse possession claim failing - ie, if the claim fails for some reason (after all we know little of the details) and the landowner wants their land back, what then?  Presumably the house owner would have to demolish the parts of the house built on the landowner's land.  No doubt the insurance policy could compensate the house owner for such disruption and loss of value 

Yes, ultimately that's what it would do. Obviously, the risk of a legal owner suddenly turning up is pretty remote, and even if they did, they're more likely to want some cash to sell their interest rather than actually evict the OP. 

I agree that in the case of a failed adverse possession the land owner would probably want a cash settlement.  But if there is part of a house involved then that cash settlement could be very high (check for insurance policy max payout limit?).
Also, there's a chance (admittedly small) that the landowner would be very stubborn and insist on vacant possession, as would be their right.  There are plenty of examples of intransigent landowners who seemingly ignore all 'normal' reason.

davidmcn

Mickey666 said:

davidmcn said:

Mickey666 said:

Possibly, but I can't see how an insurance policy can protect against an adverse possession claim failing - ie, if the claim fails for some reason (after all we know little of the details) and the landowner wants their land back, what then?  Presumably the house owner would have to demolish the parts of the house built on the landowner's land.  No doubt the insurance policy could compensate the house owner for such disruption and loss of value 

Yes, ultimately that's what it would do. Obviously, the risk of a legal owner suddenly turning up is pretty remote, and even if they did, they're more likely to want some cash to sell their interest rather than actually evict the OP. 

I agree that in the case of a failed adverse possession the land owner would probably want a cash settlement.  But if there is part of a house involved then that cash settlement could be very high (check for insurance policy max payout limit?).

Cover is normally for the full purchase price of the whole property.