Buying a house with insurance claim 40 yrs ago

TBorg

We put offer on a house but have just found out that its foundations were underpinned about 40years ago and that sellers also made an insurance claim for it. We have asked for any relevant documents. We have got the survey done, waiting for report. Surveyor informally mentioned a few things:

• Slope in the floor where foundation was underpinned.
  
• Some cracks in garage which was extended 10 years after the claim. Most likely settlement cracks.
  
• Though there is one crack - wider at the bottom and narrow at the top, which he cannot explain.
  
• More than usual surface water drains (forgot the technical term). Possibly linked to underpinning.
  

I checked with insurers and most will not cover it, some did agree as  the claim was over 25 years ago. Property is not in an area where subsidence is common. Also appreciate the difficulty when we try to sell the house ourselves.

Me and Mrs love the house but definitely don't want to make an emotional decision. If you were in our position, what would need to happen now for you to proceed with this property. Is there any scenarios where you would give us a green light or is it time to walk away. Thanks for all the time and help.

EDIT:
Seller just came back saying they don't have any documents as it was long time ago. He said lot of owners on the street got their houses voluntarily underpinned at that time and it was all covered by insurance. He also said "it was because of the sand", which is exact opposite of how it works (clay = subsidence, sand = settlement).

amanda_p

Our house was underpinned over 25 years ago. Ours was down to a variety of reasons, tree roots,house built in a very hot summer on clay soil,water table reduction due to a reservoir 4 miles away. 
 It would always be an insurance claim as underpinning is very expensive.

We have had no problems since and in some ways the problem has been eradicated for you as work has already been done.Also these days unless it is hugely problematic subsidence or heave is not as worrying as it used to be. When we had ours done the movement of the house which was mm was tracked over 3 years before there was any talk of remedial work. It is done very differently today.
Your surveyor should be able to help you with his report and any questions you may have.

Building insurance is no higher especially as it was done a long time ago. Better to have house owners that have dealt with the problem in the correct manner rather than someone who did their own remedial work which looks fine on the surface but is hiding a hornet nest of problems underneath.

GDB2222

I suppose that it’s probably okay, but, even so, you might be paying a couple of hundred a year more for insurance. Is this house noticeably cheaper than other houses that don’t have the subsidence issue?

AdrianC

Subsidence is because the original foundations were inadequate for the ground conditions. Sometimes, that's because they were badly designed, sometimes it's because the ground conditions changed due to external factors.

Underpinning is replacing and reinforcing those foundations.

So, if the property has been stable for 40yrs since it was underpinned... is there a problem any more?

GDB2222

AdrianC said:

Subsidence is because the original foundations were inadequate for the ground conditions. Sometimes, that's because they were badly designed, sometimes it's because the ground conditions changed due to external factors.

Underpinning is replacing and reinforcing those foundations.

So, if the property has been stable for 40yrs since it was underpinned... is there a problem any more?

You may well be right that structurally the house is okay. But, there’s this, from the op:

” I checked with insurers and most will not cover it, some did agree as  the claim was over 25 years ago. Property is not in an area where subsidence is common.”

If the house is a pariah for insurers, it's a problem house. It is effectively defective.

TBorg

GDB2222 said:

Is this house noticeably cheaper than other houses that don’t have the subsidence issue?

It is fairly priced compared to other houses on the street. One sold just few months ago, we had also bid on that one. So quite confident that the price point is fair i.e. no special discount for the underpinning.

About insurance, is it right that I will have to go to a specialty insurer as most "regular" insurers will not cover such houses?

GDB2222

TBorg said:

GDB2222 said:

Is this house noticeably cheaper than other houses that don’t have the subsidence issue?

It is fairly priced compared to other houses on the street. One sold just few months ago, we had also bid on that one. So quite confident that the price point is fair i.e. no special discount for the underpinning.

And, you are sure that a lot of insurance companies won’t touch it?

TBorg

AdrianC said:

So, if the property has been stable for 40yrs since it was underpinned... is there a problem any more?

We don't quite know if it was a one off issue or ongoing. Because we do see cracks in garage - at least one that is not related to settlement. 

AdrianC

TBorg said:

AdrianC said:

So, if the property has been stable for 40yrs since it was underpinned... is there a problem any more?

We don't quite know if it was a one off issue or ongoing. Because we do see cracks in garage - at least one that is not related to settlement. 

Settlement is not subsidence... and the garage is not only a separate building, with different foundations, but the bit that's settled wasn't even built at the time of the insurance claim, right?

TBorg

GDB2222 said:
And, you are sure that a lot of insurance companies won’t touch it?

I called 5 of them, based on a comparison website. I was told there are 3 types of insurers:

1. Those that will hang up the line moment you mention "subsidence".
2. Those that will remove cover for subsidence any cover other factors only.
3. Those that will provide cover if the subsidence is more than 25 years old.

Even those in #3 will ask for relevant documents. Which the seller just told me he doesn't have. He claims it was voluntarily done, lot of houses on the street did the same at that time.

TBorg

AdrianC said:

TBorg said:

AdrianC said:

So, if the property has been stable for 40yrs since it was underpinned... is there a problem any more?

We don't quite know if it was a one off issue or ongoing. Because we do see cracks in garage - at least one that is not related to settlement. 

Settlement is not subsidence... and the garage is not only a separate building, with different foundations, but the bit that's settled wasn't even built at the time of the insurance claim, right?

So there are several cracks in garage, surveyor attributed most of them to settlement i.e. nothing to worry about. But there is one crack that he doesn't think is because of settlement. Could be subsidence, but don't know. So can't tell if subsidence has been permanently fixed or is ongoing.

Yes, the garage was extended about 10years after the underpinning.