Insurance Covenant - Compton Group

[Deleted User]

The Compton Group have acquired the freehold to my property, we moved in late 2020. It is a Victorian semi with 881 years remaining on the lease.  They have written to me to insist that there is an insurance covenant in the lease, and that I must insure for buildings cover with their approved provider of insurance, namely Zurich. I am not minded to comply, principally because I do not think the wording of the lease requires this.

My conveyancer provided an original report prior to exchange/completion and clearly they did not discover all documents relevant to the lease, I think because the freeholder was not contactable at the time. Compton have since provided me with further relevant lease documents at my request, requiring buildings cover insurance with  "royal exchange insurance corportation, or in some other respectible office or offices of insurance to be approved by the said NAMED PERSON or their assigns".

I have written to Compton to state that the "or" gives me a choice to take out cover with "some other respectable office" . Compton have written back, insisting that I must insure with their provider.  I know that opinions on the forum are not legal advice, but out of interest, I welcome any opinions as to whether my interpretation of the wording appears to be correct: that I can obtain insurnance from a provider of my choice and that Courts would likely regard a mainstream provider of insurance from a comparison site as being respectable?

I continue to comply with a further covenant whereby I must provide the details of my current buildings insurnace policy to Compton. I also now pay £5.00 annual ground rent which is not an issue.

Further to the above, would it be advisable to contact my orignal conveyancer to explore the indemnity insurnace which was to be in place regarding leasehold matters, and or should I contact the provider of the legal insurance which sits alongside my home insurance?

user1977

brett19852010 said:

Compton have since provided me with further relevant lease documents at my request, requiring buildings cover insurance with  "royal exchange insurance corportation, or in some other respectible office or offices of insurance to be approved by the said NAMED PERSON or their assigns".

I have written to Compton to state that the "or" gives me a choice to take out cover with "some other respectible office" .

Only if the "respectible" (is that really how the lease spells it?) insurer has been approved by the freeholder. And if there's nothing in there saying they aren't allowed to unreasonably withhold their consent, then on the face of it they have complete discretion about whether or not to approve your choice of insurer. Though I suspect there will be case law on this which others may know better than me... ETA what edddy says...

eddddy

Section 164 of Commonhold and Leasehold Reform Act 2002  should override what your lease says.

The legislation says you can insure with your own choice of 'authorised' insurer, if you want.  (So ask your freeholder why they believe section 164 doesn't apply to your house.)

See: https://www.legislation.gov.uk/ukpga/2002/15/section/164


But you have to serve notice on your freeholder - and they might charge you a 'reasonable' fee for dealing with the notice. But the fee should only be about £30 or £50.

Some more info here: https://www.lease-advice.org/faq/i-am-a-leaseholder-of-a-house-and-my-lease-requires-me-to-arrange-insurance-with-an-insurer-nominated-or-approved-by-my-landlord-is-there-any-way-of-choosing-my-own-insurer/

[Deleted User] said:

My conveyancer provided an original report prior to exchange/completion and clearly they did not discover all documents relevant to the lease, I think because the freeholder was not contactable at the time. Compton have since provided me with further relevant lease documents at my request, requiring buildings cover insurance with  "royal exchange insurance corportation, or in some other respectible office or offices of insurance to be approved by the said NAMED PERSON or their assigns".

What documents do you mean?  Generally all the relevant information will all be in your lease - there won't be any other documents relevant to the lease.

Did your conveyancer only have part of the lease? Or is there a lease variation that your conveyancer wasn't aware of? 

[Deleted User]

user 1977 - yes of course I have corrected my spelling. I had hoped that a Court would agree with me that the likes of Aviva are a respectable provider for buildings cover for loss or fire damage, equivalent to Zurich (Compton's named provider).

edddy  - thank you for the info about Section 164 - I keep that as an option.

Regarding the documentation, it looks like the conveyancer did not have a variation: their report only makes reference to documents from 1920, whereas Compton have producted plans which show the boundary of land which appears to include the land for next door number 5,7 and 11 presumably from an earlier date (the copy of the documents is quite faded and hard to read). I therefore wonder if indemnity insurance  is likely to be relevant?

The conveyancer for the property stated in Contract Report

Abbreviated verision:

The Property register describes the land in the title and tells us of any rights which benefit it.....A term starting in 1920. The property is "good leasehold".....As this is the case, we have requested for an indemnity policy to be put into place. Charges Register In this section you will find any mortgages, other financial charges, notices and covenants affecting the land. We will obtain undertakings before completion from the seller’s solicitors for the removal of any charges from the title. However the covenants that affect the title will not be removed and you are to comply with the same during your ownership of the property. The covenants that affect this property are detailed in the Lease, these include. x Payment of the ground rent x To keep the property maintained and kept in good and tenantable repair 

The Landlord has not been registered at the Land Registry. As this is the case, we have requested for an indemnity policy from the sellers solicitors and for the seller to cover for the cost of the same. In the event of the landlord determining or attempting to determine the lease of the Property arising from failure to: 1. pay outstanding ground rent, service charges or other fees in accordance with the terms of the lease and/or 2. obtain prior consent to - assignment of the lease and/or mortgage or charge secured on the Property - arrangement of buildings insurance - any alteration, extension and/or conversion works completed at least 12 months before the Policy Commencement Date directly attributable to the Insured Risk, the Insurer will pay to or on behalf of the Insured, the following: a. the cost of defending or prosecuting legal proceedings in a court or tribunal whether the proceedings are brought by the person making the claim or in the name of the Insured including the cost of seeking relief from forfeiture of the lease b. damages, compensation and costs and expenses awarded against the Insured by a court or tribunal c. the expense of complying with an injunction awarded against the Insured or undertaking given by the Insurer in the name of the Insured d. reduction in market value of the Property, in accordance with the Insured Use, where the Insured is unsuccessful in obtaining relief from forfeiture and the lease is terminated, the values to be determined by a surveyor with reference to prices current at the date of an order by a court or tribunal, or where the Insurer otherwise accepts liability. The surveyor will be appointed jointly by the parties or, in absence of mutual agreement, by the President for the time being of the Royal Institution of Chartered Surveyors. The cost of the survey shall be incurred by the Insurer. e. any other costs incurred with the written agreement of the Insurer for the purpose of settling any claim. 

eddddy

[Deleted User] said:

Regarding the documentation, it looks like the conveyancer did not have a variation: their report only makes reference to documents from 1920, whereas Compton have producted plans which show the boundary of land which appears to include the land for next door number 5,7 and 11 presumably from an earlier date (the copy of the documents is quite faded and hard to read). I therefore wonder if indemnity insurance  is likely to be relevant?

The earlier document won't be a lease variation, if that's what you mean. You can't vary (or change) a lease that hadn't been written at the time.

But the document sounds like it might be a head lease.

Does your lease say anything about having to observe covenants in a 'head lease' or 'superior lease'?

You are only bound by what your lease says (and/or the law) - you're not bound by any other documents.

[Deleted User] said:

edddy  - thank you for the info about Section 164 - I keep that as an option.

Why not just use the law (Commonhold and Leasehold Reform Act) - which is very clear - instead of having arguments about the wording of the lease?

If you're worried about the administration charge, you'll almost certainly have to pay that under the terms of the lease anyway.

[Deleted User]

eddddy - The lease does state that it requires compliance with the covenants in the head lease. Thank you also for the advice on terminology, it will really help me when dealing with the matter.

Well, my options would be to check out the cost of insuring with Compton's provider Zurich, which is by broker only. Alternatively, to use Section 134 paying the admin fee (unknown £) as you say, or I could purchase the freehold for £700.00 using Compton solicitors (I wont use theirs).

I have emailed my original conveyancer, if only to live in hope that they might say to ignore the demand. I also contacted a local conveyancer last week, to ask them a price for their legal work in the purchase of the freehold, they went on to suggest that I ignore the insurance covenant. (Obviously, such an opinon, though thought provoking, was not paid for binding legal advice). It is not my intention with any other these brief enquiries to waste a lot of time or money.

eddddy

[Deleted User] said:

...they went on to suggest that I ignore the insurance covenant. 

I very strongly suspect that they meant... ignore the covenant and use your rights under the Commonhold and Leasehold Reform Act instead.

Simply ignoring a covenant could work out very expensive for you - you might end up having to pay the freeholder's admin costs, solicitors costs, and legal costs for enforcement.

jimbog

It might be worthwhile getting a quote from Zurich directly rather than Zurich through Compton

Dreamdiving

[Deleted User] said:

The Compton Group have acquired the freehold to my property, we moved in late 2020. It is a Victorian semi with 881 years remaining on the lease.  They have written to me to insist that there is an insurance covenant in the lease, and that I must insure for buildings cover with their approved provider of insurance, namely Zurich. I am not minded to comply, principally because I do not think the wording of the lease requires this.

My conveyancer provided an original report prior to exchange/completion and clearly they did not discover all documents relevant to the lease, I think because the freeholder was not contactable at the time. Compton have since provided me with further relevant lease documents at my request, requiring buildings cover insurance with  "royal exchange insurance corportation, or in some other respectible office or offices of insurance to be approved by the said NAMED PERSON or their assigns".

I have written to Compton to state that the "or" gives me a choice to take out cover with "some other respectable office" . Compton have written back, insisting that I must insure with their provider.  I know that opinions on the forum are not legal advice, but out of interest, I welcome any opinions as to whether my interpretation of the wording appears to be correct: that I can obtain insurnance from a provider of my choice and that Courts would likely regard a mainstream provider of insurance from a comparison site as being respectable?

I continue to comply with a further covenant whereby I must provide the details of my current buildings insurnace policy to Compton. I also now pay £5.00 annual ground rent which is not an issue.

Further to the above, would it be advisable to contact my orignal conveyancer to explore the indemnity insurnace which was to be in place regarding leasehold matters, and or should I contact the provider of the legal insurance which sits alongside my home insurance?

Compton Group are a terrible company in my opinion and any communication or transaction with them should be treated with extreme caution (like you would a rabid dog)... 

There is a movement of people working towards a major legal case against them for harassing people to buy their insurance or the freehold or whatever and they just lost a legal battle in a tribunal

chanz4

doesnt that break the new fca rules about shopping around