Buyer went to council so can no longer have an indemnity

1978john_2

We are selling an inherited property. The buyer has gone to the council so can no longer get an indemnity. We think they may pull out of the purchase now. If we get a new buyer, will they be ok to get indemnity even if previous buyer went to the council? I’m hoping this makes sense. 

TadleyBaggie

What does "gone to the council" mean?

1978john_2

Sorry. So, the solicitor said as they have gone to the council for more info on what was found in the survey (something to do with the property being built on an old brickworks which was new to us and possible contaminated soil) so as a result of this they can no longer get indemnity. 

FlorayG

Indemnity against what?
If there is a problem with the house and you now know about it, you will have to declare it to any future prospective purchasers

1978john_2

We have only been told that the property was built on an old brickworks and this is why an indemnity may have been needed but as they went to the council asking for more info on this they can no longer get indemnity and I was worried that the next buyer will also be declined indemnity. I’ll chat with my sols I think. 

theartfullodger

Indemnity for what from whom, please?

Or is this a wind up?

ThisIsWeird

Clearly not a wind-up.

I presume '78john knows that the house is built on the old brickworks, which may (I don't know) be a potential issue, so was looking for an indemnity policy to cover any comeback?

I have obviously no idea what issue it could cause, or what any policy would cover in whatever circumstance. I also don't know how them going to the council would affect a policy, since what does this have to do with the council - they aren't going to take any action against the house, are they?

John, who suggested the policy?

Usually these indemnity policies protect against something 'untoward' being 'discovered' after a sale, where 'potential' action 'could' taken by a 3rd party (often the LA if it involves a Planning or Building Control breach, for example), or possibly by a neighbouring property if it covers things like unknown (to them) drains running under their land - that sort of stuff. Ie, you 'know' that something is not quite right, but it isn't essential or easy or affordable to sort, so you take out an indemnity policy instead, in case it is discovered or acted against afterwards.

Who would or could take action in this case? I cannot see any authority insisting you demolish the house, clear the brickworks, and rebuild the house.

Do you know that it is a potential issue? Is the policy designed to cover any drop in the house's value should this issue be discovered? If so, I cannot see it working.

First - is the presence of the old brickworks an issue or not? (I have no idea). If it is, and it could 'substantially affect the value of the property', then YOU need to declare this in the TA6 - I understand that Q (or similar) exists. An indemnity policy isn't going to cover you if you fib about it.

So, where is this whole issue coming from? What does your conveyancing solicitor say?

Mutton_Geoff

I think the OP is confusing this with one of those indemnity policies, eg lack of planning application etc, where a term of the policy is nicknamed "let sleeping dogs lie". Enquiring of the council whether somewhere had a planning application wakes up the dog and invalidates the policy. I'm not sure this would be the case here, surely this is more of a survey issue?

I believe these policies aren't worth the paper they are printed on in any case and just serve a market where people are too frightened to assess and balance risks without having the back stop of "someone else must pay".

Titus_Wadd

I wonder how many claims in real life are ever made against these house-buying-type indemnity policies? 

user1977

Mutton_Geoff said:

I think the OP is confusing this with one of those indemnity policies, eg lack of planning application etc, where a term of the policy is nicknamed "let sleeping dogs lie". Enquiring of the council whether somewhere had a planning application wakes up the dog and invalidates the policy. I'm not sure this would be the case here, surely this is more of a survey issue?

I suppose the theoretical risk is of the council deciding it ought to do something about the supposedly contaminated land. Which in reality isn't going to happen merely because somebody has spotted that an old map had a brickworks marked on it.

I wouldn't expect buyers generally to get excited about this.

Hoenir

Similar problem a few years back. When the site our property was built on was identified as being a chemical works in the 1850's. Eventually an indemnity policy was arranged to cover the demolition and rebuilding of the property. Plus the excavation and replacement of the top 12' of soil. Our conveyancer said at the time that he had a brickworks case that was proving far more challenging to resolve.