Indemnity policy for absence of build-over agreement

schmuel

Hello all,

First post in this section of the thread, hope someone here might be able to answer a question that my googling has failed to resolve.

We are in the process of selling our house. It's a Victorian brick terrace and when we first bought it it had a mid-20th century extension at the back. We demolished the extension part in 2019 and re-built it, sticking to the orignal footprint of the house.

There is a manhole in the back garden within 3 meters of the back of the extension. We neglected to get a build-over agreement when we did the works in 2019 (just through ignorance of the fact we needed one) and it's now cropped up as part of our buyer's conveyancing. 

It seems easiest to get an indemnity policy to cover the lack of a build-over agreement, but my question is - what level of indemnity cover would we require? The buyer's solicitor is suggesting the full sale price of the house - which is quite high given its location in inner London, and therefore makes the policy fairly expensive - but this seems a bit excessive, since presumably the policy would only ever be needed to cover repairs to the sewer (rather than, say, rebuilding the house)?

Any guidance would be much appreciated, thanks!

RiskAverse100

The cover under such policies is invariably the full sale price.  If the buyer is taking out a mortgage then this is what lenders will usually require.  Policies like this will be taken out online and minimal information is requested about what is actually involved and what sums might be involved if a claim was ever made.  As a result, it is easiest for the insurers if the full sale price is the cover sum.

This is relevant wording from a commonly-used policy:

If the Statutory Body enforces or attempts to enforce their legal rights to remove any Building or gain access to the Utilities, the policy covers you for:

• costs you are required to pay to compensate the Statutory Body for any additional costs to gain access to the Utilities

• costs of reinstating all or part of the Building after it has been demolished or altered in order to gain access to the Utilities, but only if reinstatement can legally be undertaken (i.e. if a build over agreement is required and granted, and subject to any required planning permission, building regulations approval, etc.)

• loss in the value of your property as a consequence of enforcement action being taken against you

• the amount of an out of court settlement if an agreement can be reached with the party taking action against you to avoid court proceedings

• costs you may incur with our consent in defending your position

As you can see from this, in some cases rather more is involved than sewer repairs!

schmuel

Hi, thanks so much for the response - that all makes sense, and good to know it's standard to set the policy at the full sale amount. 

Cheers,
Schmuel