Insolvency Indemnity Policy

Elle83

Our solicitor contacted us today to say that our buyer's solicitors have requested an indemnity policy for insolvency, approx £100. They said the money would come from the sale of our property. 

Actually getting our sale moving has been a grind, so I said we would pay to keep things moving. I did ask for clarification about what it was actually for, and they said their lender requires it.

When I googled and searched on here for insolvency indemnity policy, it came up with threads about gifted deposits or houses being sold cheaply by relatives. 

Does anybody else have any different experiences? Specifically being the vendor and being asked to pay for it. 

Thanks in advance. 

user1977

Your solicitor ought to be able to provide a better explanation than that. Has your property changed hands recently, perhaps at less than market value?

Elle83

My solicitor said "Their mortgage offer has a special requirement that the policy is in place." 

We bought the property 20 mths ago at asking price. We sold now at 30k more than we paid, due to housing market here. 

The people before us bought it in 2016 and did quite a lot to it before we bought - roof, windows, flooring etc. So they paid 40k less than we did in 2019

user1977

Ok, they might just have a concern that the increase in value is because it was bought at undervalue, and there's a potential claim if the previous owners were insolvent and have creditors looking for the money. You can argue about it if you want - if the previous sale was on the open market and the increase is in line with general house price inflation then there's not really any risk, so if their lender is being awkward that's your buyers' problem and they can pay for the policy themselves. Up to you whether that's worth the hassle in the context of the price being paid.

Elle83

That makes sense, thank you. 

It is due to the price inflation here but as you say in the context, it is not worth making a fuss over. 

Thank you for responding.