Indemnity insurance for unadopted road

glyn2000

Hi,

I'm selling a Taylor Wimpey apartment I bought new 13 years ago. My buyer's solicitor is requesting that I take out indemnity insurance for the estate road as it is unadopted. I understand this is coming from the buyer's lender - Barclays. My lease clearly says that the Developer takes responsibility for the road and sewage maintenance until such time that it is adopted by the local council. My management company has confirmed this, that Taylor Wimpey adhere to it and have, in fact, carried our some minor maintenance on the development recently. They also said that if the Developer couldn't fulfill the maintenance , e.g. it went into administration, then the responsibility automatically passes to the council. Assuming this information is correct, I believe that a) indemnity insurance is unnecessary (approx cost £300?), b) it would not be my obligation to purchase insurance relating to a property that I will not be living in should repairs become necessary, and c) the buyer's lender could require that their the buyer take insurance as a condition of them lending to him. I would really appreciate some expert advice on whether my points (especially a) and b)) are reasonable and what I can do (apart from simply refusing to buy it and risking the sale not to go through). Thanks!

TheJP

Does the property price reflect the unadopted road issue e.g. comparable to similar properties with adopted roads? Usually speaking you are selling a property with an issue so indemnity would be your responsibility to appease your buyers. However i remember having to pay for chancel insurance when i bought a property, it was buttons mind.

Its up to you, you could refuse to pay it and the buyers either pay it and complete the sale or they decided to pull out. 

user1977

In any event, £300 seems an absurdly high premium for an almost non-existent risk.

robatwork

glyn2000 said:

Hi,

I'm selling a Taylor Wimpey apartment I bought new 13 years ago. My buyer's solicitor is requesting that I take out indemnity insurance for the estate road as it is unadopted. I understand this is coming from the buyer's lender - Barclays. My lease clearly says that the Developer takes responsibility for the road and sewage maintenance until such time that it is adopted by the local council. My management company has confirmed this, that Taylor Wimpey adhere to it and have, in fact, carried our some minor maintenance on the development recently. They also said that if the Developer couldn't fulfill the maintenance , e.g. it went into administration, then the responsibility automatically passes to the council. Assuming this information is correct, I believe that a) indemnity insurance is unnecessary (approx cost £300?), b) it would not be my obligation to purchase insurance relating to a property that I will not be living in should repairs become necessary, and c) the buyer's lender could require that their the buyer take insurance as a condition of them lending to him. I would really appreciate some expert advice on whether my points (especially a) and b)) are reasonable and what I can do (apart from simply refusing to buy it and risking the sale not to go through). Thanks!

Just interested in the bit I highlighted above. Did they "say" it to you or do you have that in writing somewhere? Just have my doubts the council would allow this unless previously agreed.

Section62

robatwork said:

Just have my doubts the council would allow this unless previously agreed.

Yes, there is no 'automatic' transfer of responsibility for unadopted roads if the owner goes out of business.

The highway authority may agree to adopt the road in whatever state it is in, or there might be a completion bond which will pay for the road to be finished to an adoptable standard. But nothing is 'automatic'.  I wouldn't want to rely on heresay that the council will take on responsibility.

The risk of this becoming an issue depends on how TW have structured the development financially.  It isn't uncommon for developers to set up a subsidiary company specifically for each development - so whilst the risk of TW going into administration might be remote, if this development is the responsibility of a subsidiary then the risk of administration could be higher.

Also, going 13 years without the adoption being competed is not a good sign... it could be that which is causing Barclays to get spooked.

glyn2000

TheJP said:

Does the property price reflect the unadopted road issue e.g. comparable to similar properties with adopted roads? Usually speaking you are selling a property with an issue so indemnity would be your responsibility to appease your buyers. However i remember having to pay for chancel insurance when i bought a property, it was buttons mind.

Its up to you, you could refuse to pay it and the buyers either pay it and complete the sale or they decided to pull out. 

Thanks for your reply!

The selling price of my flat is comparable to similar and identical properties on the development (mine has the advantage of having changed the gound rent payable - when it was built it doubled every 10 years. It now reflects the RPI). The issue of the unadopted road has only just come up, 6 months after the sale was agreed.

glyn2000

robatwork said:

glyn2000 said:

Hi,

I'm selling a Taylor Wimpey apartment I bought new 13 years ago. My buyer's solicitor is requesting that I take out indemnity insurance for the estate road as it is unadopted. I understand this is coming from the buyer's lender - Barclays. My lease clearly says that the Developer takes responsibility for the road and sewage maintenance until such time that it is adopted by the local council. My management company has confirmed this, that Taylor Wimpey adhere to it and have, in fact, carried our some minor maintenance on the development recently. They also said that if the Developer couldn't fulfill the maintenance , e.g. it went into administration, then the responsibility automatically passes to the council. Assuming this information is correct, I believe that a) indemnity insurance is unnecessary (approx cost £300?), b) it would not be my obligation to purchase insurance relating to a property that I will not be living in should repairs become necessary, and c) the buyer's lender could require that their the buyer take insurance as a condition of them lending to him. I would really appreciate some expert advice on whether my points (especially a) and b)) are reasonable and what I can do (apart from simply refusing to buy it and risking the sale not to go through). Thanks!

Just interested in the bit I highlighted above. Did they "say" it to you or do you have that in writing somewhere? Just have my doubts the council would allow this unless previously agreed.

Thanks. They "said" it to me. I only have in writing on the lease that the Developer agrees to take responsibility for the road until it passes to public funding. They told me that other properties on my development have been sold in the past and the unadopted road has never been an issue.

glyn2000

Section62 said:

robatwork said:

Just have my doubts the council would allow this unless previously agreed.

Yes, there is no 'automatic' transfer of responsibility for unadopted roads if the owner goes out of business.

The highway authority may agree to adopt the road in whatever state it is in, or there might be a completion bond which will pay for the road to be finished to an adoptable standard. But nothing is 'automatic'.  I wouldn't want to rely on heresay that the council will take on responsibility.

The risk of this becoming an issue depends on how TW have structured the development financially.  It isn't uncommon for developers to set up a subsidiary company specifically for each development - so whilst the risk of TW going into administration might be remote, if this development is the responsibility of a subsidiary then the risk of administration could be higher.

Also, going 13 years without the adoption being competed is not a good sign... it could be that which is causing Barclays to get spooked.

Thanks for the information, much appreciated. I don't know why the road hasn't been adopted after so long. The development has been finished for several years. When this issue came up in the buyer's solicitor's searc, my soliticor apparently replied with the same information I explained (i.e. that the lease states the Developer takes responsibility until adopted). Buyer's solicitor has not given a response. From a consumer perspective, what's the point of having a convenant in the lease that the road is not the property-owners' responsibility if the lender/buyer's solicitor ignores it? It is difficult for a lay person to interpret and negotiate, and my solicitor only asks me what I want to do!

user1977

glyn2000 said:

Section62 said:

robatwork said:

Just have my doubts the council would allow this unless previously agreed.

Yes, there is no 'automatic' transfer of responsibility for unadopted roads if the owner goes out of business.

The highway authority may agree to adopt the road in whatever state it is in, or there might be a completion bond which will pay for the road to be finished to an adoptable standard. But nothing is 'automatic'.  I wouldn't want to rely on heresay that the council will take on responsibility.

The risk of this becoming an issue depends on how TW have structured the development financially.  It isn't uncommon for developers to set up a subsidiary company specifically for each development - so whilst the risk of TW going into administration might be remote, if this development is the responsibility of a subsidiary then the risk of administration could be higher.

Also, going 13 years without the adoption being competed is not a good sign... it could be that which is causing Barclays to get spooked.

From a consumer perspective, what's the point of having a convenant in the lease that the road is not the property-owners' responsibility if the lender/buyer's solicitor ignores it? It is difficult for a lay person to interpret and negotiate, and my solicitor only asks me what I want to do!

Then you have a useless solicitor. They ought to be giving you advice, that's what you're paying them for.

sheramber

If the developer goes bust then  the covenant is useless as who is going to maintain the road? 

You have no proof the council will take responsibility.

The only people affected will be the property owners on the road.

robatwork

glyn2000 said:

robatwork said:

glyn2000 said:

Hi,

I'm selling a Taylor Wimpey apartment I bought new 13 years ago. My buyer's solicitor is requesting that I take out indemnity insurance for the estate road as it is unadopted. I understand this is coming from the buyer's lender - Barclays. My lease clearly says that the Developer takes responsibility for the road and sewage maintenance until such time that it is adopted by the local council. My management company has confirmed this, that Taylor Wimpey adhere to it and have, in fact, carried our some minor maintenance on the development recently. They also said that if the Developer couldn't fulfill the maintenance , e.g. it went into administration, then the responsibility automatically passes to the council. Assuming this information is correct, I believe that a) indemnity insurance is unnecessary (approx cost £300?), b) it would not be my obligation to purchase insurance relating to a property that I will not be living in should repairs become necessary, and c) the buyer's lender could require that their the buyer take insurance as a condition of them lending to him. I would really appreciate some expert advice on whether my points (especially a) and b)) are reasonable and what I can do (apart from simply refusing to buy it and risking the sale not to go through). Thanks!

Just interested in the bit I highlighted above. Did they "say" it to you or do you have that in writing somewhere? Just have my doubts the council would allow this unless previously agreed.

Thanks. They "said" it to me. I only have in writing on the lease that the Developer agrees to take responsibility for the road until it passes to public funding. They told me that other properties on my development have been sold in the past and the unadopted road has never been an issue.

Ask them to put what they said into writing. You'll find their total lack of response instructive. Sounds like hogwash.