Puchased BTL property. Insurance company highlighted an "subsidence" issue

NeedHelp2021

I am looking for help and guidance on the BTL property purchased last week. To my horror it has translated into "subsidence" issue yesterday.

Prior to purchase, satisfactory valuation was carried out by Mortgage lender (on-site visit).

The searches carried out by the solicitor came up clean, with no untoward concerns.

I commissioned "Home Buyers Report" on the property by an independent RICS surveyor who gave the property a clean chit which followed Completion and contract exchange last week.

When I reached out to Insurance company for Buildings/ Landlord insurance, I was informed that the aforesaid property has been reported for subsidence (but not claimed owing) to which Insurance has been denied. The Insurance company advised to commission "Structural survey" and remediate the problem before seeking for obtaining Buildings/ Landlord insurance. 

I would really appreciate any advise/ help/ pointers on the following queries::

1. Can I ask my solicitor how the subsidence issue was not picked up in the searches?
2. Can I ask the surveyor how the issue of subsidence was on picked in the "Home buyers report"?
3. The agent (and the seller) never disclosed the underlying "subsidence" issue in the property. Do I have a legal stand to pursue case for misrepresentation of facts?
4. In the Fitting and Contents TA6 form under the section "Insurance" there is a question "Has the seller made any building insurance claims?" The seller has responded "No" to it. Is it mis-representation/ falsification of facts?
5. Should I proceed with "Structural survey" and remediation path as suggested? What would be the costs & long term implications involved?
6. How easy/ difficult is it to obtain Buldings/ Landlord insurance?
7. Any other options I can explore?

As you can imagine the awful situation we have got ourselves into, any help/ advice/ pointers will be truly appreciated (good karma on your way).

eddddy

NeedHelp2021 said:

When I reached out to Insurance company for Buildings/ Landlord insurance, I was informed that the aforesaid property has been reported for subsidence (but not claimed owing) to which Insurance has been denied. T

This might be due to a naïve, over zealous previous owner of the property.

You should never contact your insurers and mention subsidence, unless you're pretty sure there is subsidence and you intend to make a claim.

One possibility is that a previous owner noticed a crack, and the first thing they did was phone their insurers to say they thought they had subsidence. And the 'incident' was recorded on the centralised CUE insurance database.

Then, they spoke to a building professional who said it was just cosmetic (e.g. heat expansion) - and the crack just needed a bit of Polyfilla. 

In that case, the seller would be correct in saying there's been no subsidence (and no claim).


The CUE database holds details of 'incidents' for 6 years, so you might have to jump through hoops each time you want to change insurers during that time.


But that's all just a guess - will the insurers give you any more info about when the incident was reported, so that you can investigate further?

canaldumidi

NeedHelp2021 said:

......::

1. Can I ask my solicitor how the subsidence issue was not picked up in the searches?
2. Can I ask the surveyor how the issue of subsidence was on picked in the "Home buyers report"?
3. The agent (and the seller) never disclosed the underlying "subsidence" issue in the property. Do I have a legal stand to pursue case for misrepresentation of facts?
4. In the Fitting and Contents TA6 form under the section "Insurance" there is a question "Has the seller made any building insurance claims?" The seller has responded "No" to it. Is it mis-representation/ falsification of facts?
5. Should I proceed with "Structural survey" and remediation path as suggested? What would be the costs & long term implications involved?
6. How easy/ difficult is it to obtain Buldings/ Landlord insurance?
7. Any other options I can explore?

As you can imagine the awful situation we have got ourselves into, any help/ advice/ pointers will be truly appreciated (good karma on your way).

1. You can ask, but solicitor's searches relate to the legal title, not the condition of the property.

2. if there was no sign of subsidence, the surveyor would not have reason to mention it. Since no claim was even made (I think?), this suggests there may not not actually be a subsidence issue

3. If the agent was not made aware by his client (the seller) of a subsidence issue, he did not misrepresent the facts. If the seller did not state anywhere that there was no subsidence issue (check the Property Information Form), he did not misrepresent the facts.

4. You say "but not claimed owing". It's not clear what you mean by this, though I suspect you mean the seller mentioned/reported possible subsidence to his insurer, but did not actually make a claim. Is that the case? However, if the seller did make an actual  insurance claim, then you will have a claim against the seller.

5. It sounds like if you want insurance, or your mortgage lender insists you insure, then you have no choice. Though an independant insurance broker might recommend an insurer less likely to take this hard-line attitude. A Structural Survey by a Structural Engineer will probably costs around £1000. The implications depend on the subsequent report. If subsidence is not found, there will be no (or minimal) implications. If ongoing subsidence is found, you may have to underpin the property, which can be very expensive and require specialist (expensive)  insurance thereafter.

6. Speak to an independant insurance broker who specialises in a) BTLs and b) subsidence

7. Not that I can think of!

Now - where's my good karma!

user1977

When you say you've "purchased" the property, do you mean actually completed the purchase? If so, it seems a bit late to be arranging buildings insurance. Or are you at some earlier stage in the process? 

theartfullodger

Which country (Wales, NI...) is this ?  Have you completed (or equivalent) please?

NeedHelp2021

eddddy said:

NeedHelp2021 said:

When I reached out to Insurance company for Buildings/ Landlord insurance, I was informed that the aforesaid property has been reported for subsidence (but not claimed owing) to which Insurance has been denied. T

This might be due to a naïve, over zealous previous owner of the property.

You should never contact your insurers and mention subsidence, unless you're pretty sure there is subsidence and you intend to make a claim.

One possibility is that a previous owner noticed a crack, and the first thing they did was phone their insurers to say they thought they had subsidence. And the 'incident' was recorded on the centralised CUE insurance database.

Then, they spoke to a building professional who said it was just cosmetic (e.g. heat expansion) - and the crack just needed a bit of Polyfilla. 

In that case, the seller would be correct in saying there's been no subsidence (and no claim).


The CUE database holds details of 'incidents' for 6 years, so you might have to jump through hoops each time you want to change insurers during that time.


But that's all just a guess - will the insurers give you any more info about when the incident was reported, so that you can investigate further?

"You should never contact your insurers and mention subsidence,"
>> I wasnt aware of the subsidence. If I was, I would have stayed miles away. I contacted the insurance company to take out the insurance policy. And they brought to my attention that the CUE database mentions of subsidence reported by the previous seller in 2019, but never claimed (for reasons unknown). Possibly was a minor crack and as you suggest, filled it up with Polyfilla. 

"The CUE database holds details of 'incidents' for 6 years, so you might have to jump through hoops each time you want to change insurers during that time."
>> At this point in time, I am happy to show the "Home Buyers survey report" from any insurance provider and continue with to stay with them until such time it disappears from the CUE database.

"will the insurers give you any more info about when the incident was reported"
>> They only said subsidence was reported in 2019, but no claim was made, hence its on CUE database.

NeedHelp2021

user1977 said:

When you say you've "purchased" the property, do you mean actually completed the purchase? If so, it seems a bit late to be arranging buildings insurance. Or are you at some earlier stage in the process? 

Yes, actually completed the purchase, and caught unawares about arranging building insurance prior to complete. In my defense, the solicitor/ agent did not give me heads up. I had contacted one insurance company for Landlord insurance who told me they cannot quote for an insurance until a tenant has been finalised. At this point I thought of reaching out to Insurance companies only after contract exchange and completion. 

NeedHelp2021

theartfullodger said:

Which country (Wales, NI...) is this ?  Have you completed (or equivalent) please?

England. Yes, contract exchange and completion fully done. I have keys to the property in my possession. 

eddddy

NeedHelp2021 said:

"You should never contact your insurers and mention subsidence,"

>> I wasnt aware of the subsidence. If I was, I would have stayed miles away. I contacted the insurance company to take out the insurance policy. And they brought to my attention that the CUE database mentions of subsidence reported by the previous seller in 2019, but never claimed (for reasons unknown). Possibly was a minor crack and as you suggest, filled it up with Polyfilla. 

Just to clarify - when I said "you should never contact...", I was meaning "one should never contact...". (I wasn't suggesting that you'd done anything wrong. I was suggesting that the previous owner might have made a 'bad decision'.)


You can try to contact the previous owner from 2019, to find out what happened. Maybe they got a written report from a surveyor or engineer at the time saying no subsidence. If they give you a copy, that might help your discussions with insurers now.

But the previous owner has no obligation to discuss it with you - and their solicitor might suggest they don't talk to you, to avoid any risk of saying something that gives you cause to sue them.

Grumpy_chap

NeedHelp2021 said:

I commissioned "Home Buyers Report" on the property by an independent RICS surveyor who gave the property a clean chit which followed Completion and contract exchange last week.

When I reached out to Insurance company for Buildings/ Landlord insurance, I was informed that the aforesaid property has been reported for subsidence (but not claimed owing) to which Insurance has been denied. The Insurance company advised to commission "Structural survey" and remediate the problem before seeking for obtaining Buildings/ Landlord insurance. 

1. In the Fitting and Contents TA6 form under the section "Insurance" there is a question "Has the seller made any building insurance claims?" The seller has responded "No" to it. Is it mis-representation/ falsification of facts?
2. Should I proceed with "Structural survey" and remediation path as suggested? What would be the costs & long term implications involved?

Are you an FTB?  Normally, you need to have Buildings Insurance in place from the moment of (before) exchange of contracts as you are committed to buy at that point, even if there were an "event" while the property remains in the care of the vendor.

Are you able to take out Buildings Insurance that excludes subsidence in the interim until you get the issue around (possible) subsidence resolved?

It is possible that the vendor made a contact with the insurer and mentioned the word "subsidence" so it has been recorded, but then there was no subsidence and no claim, hence the insurer advising "reported for subsidence (but not claimed)" and the vendors stating on the TA6 "No" to the question about past claims.

Pragmatically, the next step is to commission the structural survey as required by the insurer.  It is important to understand the insurer's requirements / qualifications that the surveyor must hold so that they accept the findings of the report.  This may conclude there is no subsidence and the matter will be closed.  Alternatively, if the report advises there is subsidence, the next steps and resolution can be decided on at that time.

Good luck!

NeedHelp2021

canaldumidi said:

NeedHelp2021 said:

......::

1. Can I ask my solicitor how the subsidence issue was not picked up in the searches?
2. Can I ask the surveyor how the issue of subsidence was on picked in the "Home buyers report"?
3. The agent (and the seller) never disclosed the underlying "subsidence" issue in the property. Do I have a legal stand to pursue case for misrepresentation of facts?
4. In the Fitting and Contents TA6 form under the section "Insurance" there is a question "Has the seller made any building insurance claims?" The seller has responded "No" to it. Is it mis-representation/ falsification of facts?
5. Should I proceed with "Structural survey" and remediation path as suggested? What would be the costs & long term implications involved?
6. How easy/ difficult is it to obtain Buldings/ Landlord insurance?
7. Any other options I can explore?

As you can imagine the awful situation we have got ourselves into, any help/ advice/ pointers will be truly appreciated (good karma on your way).

1. You can ask, but solicitor's searches relate to the legal title, not the condition of the property.

2. if there was no sign of subsidence, the surveyor would not have reason to mention it. Since no claim was even made (I think?), this suggests there may not not actually be a subsidence issue

3. If the agent was not made aware by his client (the seller) of a subsidence issue, he did not misrepresent the facts. If the seller did not state anywhere that there was no subsidence issue (check the Property Information Form), he did not misrepresent the facts.

4. You say "but not claimed owing". It's not clear what you mean by this, though I suspect you mean the seller mentioned/reported possible subsidence to his insurer, but did not actually make a claim. Is that the case? However, if the seller did make an actual  insurance claim, then you will have a claim against the seller.

5. It sounds like if you want insurance, or your mortgage lender insists you insure, then you have no choice. Though an independant insurance broker might recommend an insurer less likely to take this hard-line attitude. A Structural Survey by a Structural Engineer will probably costs around £1000. The implications depend on the subsequent report. If subsidence is not found, there will be no (or minimal) implications. If ongoing subsidence is found, you may have to underpin the property, which can be very expensive and require specialist (expensive)  insurance thereafter.

6. Speak to an independant insurance broker who specialises in a) BTLs and b) subsidence

7. Not that I can think of!

Now - where's my good karma!

Now - where's my good karma!

>> Loads and loads have been shipped. Just watch out for the Amazon delivery

2. if there was no sign of subsidence, the surveyor would not have reason to mention it. Since no claim was even made (I think?), this suggests there may not not actually be a subsidence issue
>> I am inclined to agree to your statement "there may not not actually be a subsidence issue". But sadly its recorded in centralised CUE insurance database as "subsidence" which become a deterrent for me to obtain insurance.

4. You say "but not claimed owing". It's not clear what you mean by this, though I suspect you mean the seller mentioned/reported possible subsidence to his insurer, but did not actually make a claim. Is that the case?
>> Typo I meant "I was informed that the aforesaid property has been reported for subsidence by the seller (but not claimed), owing to which the Insurance companies are denying insurance to ME.

However, if the seller did make an actual  insurance claim, then you will have a claim against the seller.

>> Yet again I agree with your statement, if the seller would have made an actual  insurance claim, then I could have made a claim against the seller.

5. It sounds like if you want insurance..

>> Yes, Buildings insurance - top priority and then Landlord Insurance. 

6. Speak to an independent insurance broker who specializes in a) BTLs and b) subsidence

>> As advised I will start with Independent Insurance Broker followed by Structural Survey by a Structural Engineer if warranted. 

Thanks once again canaldumidi. May your tribe increase.