House purchase - water mains indemnity issue

Selah14

Hi all - had a search but couldn't see anything quite specific that relates to our situation .

We are nearing completion on our house purchase, subject to ironing out a few survey results. Our solicitor has just come back to us to say there is a slight issue with the indemnity cover the seller provided for the water/drainage search results (the house house is old and partially built over public water/sewage supply).

It only covers anything sewage related with the provider South West Water - as the nature of the mains and high pressure would cause significant damage to the property should an issue occur. He's going back to our lender to check they are happy with this level of cover... has anyone come across this issue before and should we be worried? As there are many properties on our row, I am sure others must of had this issue and wouldn't all be cash buyers... and if you have had this issue, was it a flat out refusal to lend or are there ways around it?

The solicitor said it shouldn't be an issue, but just want to prepare ourselves as we we literally a week or so away from having it all wrapped up !

Thank you 

propertyrental

Is your concern simply whether the lender will lend (only time will tell) or whether you yourself might have problems in the future?

Section62

Selah14 said:

It only covers anything sewage related with the provider South West Water - as the nature of the mains and high pressure would cause significant damage to the property should an issue occur. He's going back to our lender to check they are happy with this level of cover... has anyone come across this issue before and should we be worried? As there are many properties on our row, I am sure others must of had this issue and wouldn't all be cash buyers... and if you have had this issue, was it a flat out refusal to lend or are there ways around it?

The common issue is buildings close (or built over) public sewers, because these sewers are usually constructed to serve the properties and by necessity are close to the buildings.

Less common are issues with main sewers or water supply pipes, but a few properties will have one or more of these within their boundary.

If your issue is with a high pressure clean mains water (i.e. drinking/washing water) or a sewage pumping station rising main, then it is one of the less common cases and you need to be careful.

The primary problem isn't necessarily with the pipe failing (although they sometimes do quite spectacularly) but rather with the restrictions that should apply to things you can do with the land in the vicinity of the pipe.  E.g. there may be a covenant restricting excavation (of any type) within (say) 5m of the centreline of the pipe, without prior approval of the pipe owner. (and in addition often having them come to site to monitor the work while it takes place)

If it is a clean water main you have, and the indemnity policy only covers sewerage, then you are very unlikely to be covered if there is a problem.

FlyMeSomewhere79

We are nearing exchanging contracts and the house we are selling was extended by a previous owner many years ago and that has now flagged up a build over issue as a result of the laws for sewers changing since we bought it.

My manhole covers are in my utility room and are fully accessible but we've had to agree to pay a £90 indemnity policy for our buyer. Everybody is happy with this and it hasn't interfered with our mortgage or anything.

Section62

FlyMeSomewhere79 said:

We are nearing exchanging contracts and the house we are selling was extended by a previous owner many years ago and that has now flagged up a build over issue as a result of the laws for sewers changing since we bought it.

My manhole covers are in my utility room and are fully accessible but we've had to agree to pay a £90 indemnity policy for our buyer. Everybody is happy with this and it hasn't interfered with our mortgage or anything.

It sounds like the OP's circumstances are very different, but I would make the point the BiB above is likely to be technically incorrect.

Assuming the change in the law being the 2011 adoption of shared drains as public sewers, and assuming the extension was completed before this date, then an indeminty policy isn't rquired because of the change in the law.  At the time the extension was built no build-over agreement was required.  The adoption of the drains as public sewers didn't have the effect of requiring retrospective agreements.  If the water company complained about the structure being built over their sewer then they would only need to be given (reasonable) proof the work was done prior to the adoption taking place.

There is a separate issue about having inspection chambers inside dwellings, but that is largely a building control matter, not one for the water company, and its relevance depends on when the local building control authority decided that inspection chambers inside dwellings were no longer acceptable for BC purposes.  The indemnity cover required for this might be for breach of BR, not for building over without agreement, but if the work was signed off by building control at the time then no breach of BR has occured.

So the need for indemnity cover is likely either because one of the solicitors hasn't done their homework, or the buyer (/mortgage co) is not willing to accept the advice.  Or alternatively that if everyone is happy for you to pay £90 for a piece of paper then that was the easiest (/cheapest) way to proceed.

FlyMeSomewhere79

Section62 said:

FlyMeSomewhere79 said:

We are nearing exchanging contracts and the house we are selling was extended by a previous owner many years ago and that has now flagged up a build over issue as a result of the laws for sewers changing since we bought it.

My manhole covers are in my utility room and are fully accessible but we've had to agree to pay a £90 indemnity policy for our buyer. Everybody is happy with this and it hasn't interfered with our mortgage or anything.

It sounds like the OP's circumstances are very different, but I would make the point the BiB above is likely to be technically incorrect.

Assuming the change in the law being the 2011 adoption of shared drains as public sewers, and assuming the extension was completed before this date, then an indeminty policy isn't rquired because of the change in the law.  At the time the extension was built no build-over agreement was required.  The adoption of the drains as public sewers didn't have the effect of requiring retrospective agreements.  If the water company complained about the structure being built over their sewer then they would only need to be given (reasonable) proof the work was done prior to the adoption taking place.

There is a separate issue about having inspection chambers inside dwellings, but that is largely a building control matter, not one for the water company, and its relevance depends on when the local building control authority decided that inspection chambers inside dwellings were no longer acceptable for BC purposes.  The indemnity cover required for this might be for breach of BR, not for building over without agreement, but if the work was signed off by building control at the time then no breach of BR has occured.

So the need for indemnity cover is likely either because one of the solicitors hasn't done their homework, or the buyer (/mortgage co) is not willing to accept the advice.  Or alternatively that if everyone is happy for you to pay £90 for a piece of paper then that was the easiest (/cheapest) way to proceed.

I don't know why we are being asked to provide it but I did do my research into it because the build over issue was not raised when I bought it and not when the young couple who sold it to us bought it - the reason being probably that the laws changed in 2011 and I bought the house in 2007. 

A big part of the problem when you buy old properties that have had things done over the years is that we don't have the documentation that you mentioned - that was why we had to pay it because we had no building certificates of any kind for the extension to get out of paying it.

Selah14

propertyrental said:

Is your concern simply whether the lender will lend (only time will tell) or whether you yourself might have problems in the future?

Both ! We’re not super worried about future issue as the property is circa 1880’s and there have been no issues - so happy to take on the risk - just anxious about how cautious lenders might be or if it’s a common enough issue and we just have to absorb the risk / cost if something does happen … 

Grumpy_chap

Selah14 said:

there is a slight issue with the indemnity cover the seller provided for the water/drainage search results (the house house is old and partially built over public water/sewage supply).

It only covers anything sewage related with the provider South West Water - as the nature of the mains and high pressure would cause significant damage to the property should an issue occur. 

It seems as though "catch-all" terms are being used.
You need to know what exactly is in place and the build-over / proximity risk.

1. Is the house built over water supply?
2. Or waste water / sewage pipe?
3. Or both?
4. If waste water, is it a gravity pipe?
5. Or Rising Main?
6. If water, is it a lateral?
7. Or trunk main?

Selah14

Grumpy_chap said:

Selah14 said:

there is a slight issue with the indemnity cover the seller provided for the water/drainage search results (the house house is old and partially built over public water/sewage supply).

It only covers anything sewage related with the provider South West Water - as the nature of the mains and high pressure would cause significant damage to the property should an issue occur. 

It seems as though "catch-all" terms are being used.
You need to know what exactly is in place and the build-over / proximity risk.

1. Is the house built over water supply?
2. Or waste water / sewage pipe?
3. Or both?
4. If waste water, is it a gravity pipe?
5. Or Rising Main?
6. If water, is it a lateral?
7. Or trunk main?

Both ! Sewage and mains water supply

Their comments are that if buildings insurance can be obtained on reasonable terms, to specifically include the fact that part of the property was built over water main, then the property can be considered as acceptable from their perspective.

 

If the issue is not insurable or if the terms of the policy or premium attributable to that policy are considered excessive, then the acceptability of the property will need to be reconsidered, but otherwise it seems that Halifax are happy to proceed.

So… any personal recommendations for home insurance much appreciated ! Just obtaining some quotes 

Selah14

Direct summary : 

As you know, the issue is that part of the property appears to have been built over a public sewer and the main water; while the seller’s solicitor is able to offer an indemnity policy, this is limited strictly to any claims that are brought by South West Water in connection with the sewer only. This is because of the high pressure nature of the water main that may result insignificant damage being caused to the property should any issues occur.

Section62

Selah14 said:

Direct summary : 

As you know, the issue is that part of the property appears to have been built over a public sewer and the main water; while the seller’s solicitor is able to offer an indemnity policy, this is limited strictly to any claims that are brought by South West Water in connection with the sewer only. This is because of the high pressure nature of the water main that may result insignificant damage being caused to the property should any issues occur.

I suspect they mean 'significant'.

In terms of buildings(/contents) insurance, the thing that would concern me would be being able to obtain insurance in the future, not just now.  Having the house built over a 'high pressure' main is an unusual risk so you are likely looking at a specialist insurer found through a broker.  If in future no insurers are willing to insure this risk you will be stuck with a property which can't be insured and may have great difficulty in selling it.

The current owner has a problem.... and I bet they have everything crossed that you will be kind enough to take the problem off their hands and make it yours instead.