Timescale of lender approval for indemnity policy

Homebuyer1973

I’ll try and be as brief as I can. We have been having a complete nightmare selling our house. Our original buyer dropped out after 11 weeks saying it was taking to too long which, given there has been the stamp duty factor and COVID, I thought, was totally unreasonable; especially given that their offer was not conditional in any way. Thankfully we managed to salvage, or so we thought, our onward purchase with another property that my dad and I are selling (only a couple of weeks behind our original sale for our main residence timeframe wise). We also found a cash buyer for our main residence  too. However, our vendor has stated that they would pull out of the sale on two occasions already which means we are living on a knife-edge. Unfortunately, our vendor does not need the sale of their current house in order to secure their onward purchase so doesn’t care about our emotional or financial investment at all it would seem. All 4 of the solicitors involved have had a weeks holiday one after the other, so nothing progressed during this time. Thought we were going to be able to exchange last week when suddenly our solicitor tells us that our buyers lenders have not approved the indemnity policy for the property that my dad and I are selling. There is a right of way across the property as it is an end terrace so an indemnity policy was required. Neither us nor our buyers knew that this policy had not been approved. Our buyer is as cross as we are that this has only just come to light and will be chasing it with their lender and their solicitor who was on holiday last week. If things are not sorted by close of business on Tuesday then there’s will not be enough time to give lenders notice for completion to take place on the 26th of this month. Does anyone out there know how long it takes for a lender to approve an indemnity policy? The Policy has been in place for 3 weeks now so very cross about why this has not been done!!! Is it the fault of solicitors or the lender???? Any advice or thoughts 💭 welcome. I am expecting our vendor to pull out at this stage as this is yet another delay.

user1977

Homebuyer1973 said:

 There is a right of way across the property as it is an end terrace so an indemnity policy was required.

That isn't a reason for needing an indemnity policy at all. Is there something else going on eg has the route been blocked? 

Homebuyer1973

No but vehicle access is required over another neighbours property in order to get to garage and parking space of related property. My parents have used it hassle free for over 50 yrs!!!! Access not denied or blocked in any way. Lender asked for policy to be in place.

Thrugelmir

Your buyer was a cash purchaser and now there's a lender mortgage involved ? 

If the lender has decided that an indemnity policy isn't adequate then that's their decision. Probably just come to light as the lender won't review the case until exchange nears and everything is nearly ready to be signed off. 

Homebuyer1973

No, there are two house sales going on here! We haThrugelmir said:

Your buyer was a cash purchaser and now there's a lender mortgage involved ? 

If the lender has decided that an indemnity policy isn't adequate then that's their decision. Probably just come to light as the lender won't review the case until exchange nears and everything is nearly ready to be signed off. 

No, there are two house sales going on here. We have a cash buyer for our main property and it’s the property that my dad and I are selling that needs an indemnity policy. The lenders have not reviewed the policy never mind refused approval. My question was really about how long this would take for the lender to review. I know our seller will not wait. Our EA seemed to think it was just a telephone conversation between solicitor and valuer that was needed but I just wondered if anyone out there had had experience of this. Thank you anyway 

Martian2035

We called our bank and they prioritised it for us, it took about 4 days in total between the solicitor requesting and receiving approval

user1977

Often the lender isn't even interested. They rely on the solicitor spotting that a policy is required, and on them checking that its terms are adequate. Standard instructions to the solicitors are often simply that the solicitor should get on with doing whatever is necessary, rather than start asking the lender questions they don't understand.

As for timescales, it depends on which lender it is and their current workload, could be anything from hours to weeks. 

ele_91

We have a right of way on our property. The solicitor informed the lender and they wanted more details in case they needed to revalue the property. It doesn’t impact our usage and we had a good deposit so they decided they didn’t. However perhaps your buyers lender thinks differently. 

Homebuyer1973

ele_91 said:

We have a right of way on our property. The solicitor informed the lender and they wanted more details in case they needed to revalue the property. It doesn’t impact our usage and we had a good deposit so they decided they didn’t. However perhaps your buyers lender thinks differently. 

Our buyers solicitor was on holiday last week so I suppose it is possible that the lender has asked questions which because the solicitor wasn’t there, weren’t able to be answered. I’m really hoping that this can be resolved quickly. Thanks for your response.

ele_91

@Homebuyer1973 we also have a couple of indemnities in place for doors and windows and we had a couple put in place for doors and windows and an old covenant when we sold for our buyer. The lender didn’t need to be informed of them they just trust the solicitor to do their thing. I expect it will be checking whether an indemnity is sufficient in the case of the right of way or if they need further info. Our lender was TSB and they usually replied within a day or two. 

Thrugelmir

user1977 said:

Often the lender isn't even interested. They rely on the solicitor spotting that a policy is required, and on them checking that its terms are adequate. Standard instructions to the solicitors are often simply that the solicitor should get on with doing whatever is necessary, rather than start asking the lender questions they don't understand.

Lenders may delegate to solicitors however they still have the internal capability to assess situations. Lending thousands of pounds is a serious business. Suggesting they don't understand is naive. Lenders have the final say.