Seller refusing indemnity policy

Rblk142

Hi, 
Hoping someone has some knowledge that can help. I’m currently in the process and of buying an house and we’re at the enquiries stage. There is a history of rentcharge being paid on the property and therefore our mortgage provider requires an indemnity policy. For context our seller is an executor who is selling the house on behalf of his parents. He has very little knowledge of the property. Our solicitor has advised us in order to take out an indemnity policy the seller needs to sign a statement of truth. Our sellers solicitor is refusing to let him sign it as they say an executor cannot sign a statement of truth relating to an indemnity policy. We are at a complete standstill and neither solicitor will budge. Can an executor sign a statement of truth is he has very little knowledge of the property? We don’t know who is in the wrong here and we have tried every way around it including contacting nationwide and land registry. Not sure what else to do and I am worried we’re going to have to walk away.

loubel

Well they can only sign a statement of what they know, which will be very little so I'd agree with their solicitor that it isn't appropriate. If that isn't accepted by the insurer then your solicitor will have to look for a different policy to protect you and your lender. 

Rblk142

loubel said:

Well they can only sign a statement of what they know, which will be very little so I'd agree with their solicitor that it isn't appropriate. If that isn't accepted by the insurer then your solicitor will have to look for a different policy to protect you and your lender. 

Thank you!

Our solicitor is saying there is nothing more he can do without the sellers co-operation. He has told us all possible indemnity policies require specific conditions to be confirmed by the seller, is this not the case?

mebu60

What about giving the seller a deadline to sign the statement, caveated as necessary? If they don't sign or Nationwide don't accept the caveated statement then be clear that you'll walk away. Sellers will likely have the same issue with any other potential purchaser so they need to come up with a solution. 

anselld

You cannot override your Solicitors advice as they are acting for the Mortgage Co.  However, the Executor can do if they so choose.  It would depend on the content of the statement.  For example questions like when was the rent charge last paid and how much may be answerable by access to the Deceased’s bank statement.  It just depends how much the Executor is willing to investigate “the truth”.
Sadly if they will not budge the property may not be mortgageable or another Lender with less stringent requirements may be needed.  It is not necessarily just a case of banging heads together until someone gives in.

Rblk142

Thank you! Apparently all possible lenders will require an indemnity policy for this. Our sellers solicitors keep requesting our solicitor takes out a bespoke indemnity policy but our solicitor says it’s not possible without the sellers co-operation. We’ve asked if they think they can take out a bespoke policy can they do it and we pay? They’ve said they can’t take out a policy because it’s not in the sellers interest. Not sure why they’re suggesting that’s a possibility when our solicitor is saying it’s not. Surely they can take out this policy as otherwise their client is going to be unable to sell his house to a buyer who needs a mortgage?

theartfullodger

Decide to take a gamble or not: 

Bit like taking out a lottery ticket... (as the lottery company selling it..)

anselld

Well, I dont think a bunch of people on the internet are going to fix it.  Perhaps you could ask for the issue to be reviewed by the senior partner at your firm of Solicitors on the grounds that you have currently reached an impasse.

housebuyer143

Rblk142 said:

Thank you! Apparently all possible lenders will require an indemnity policy for this. Our sellers solicitors keep requesting our solicitor takes out a bespoke indemnity policy but our solicitor says it’s not possible without the sellers co-operation. We’ve asked if they think they can take out a bespoke policy can they do it and we pay? They’ve said they can’t take out a policy because it’s not in the sellers interest. Not sure why they’re suggesting that’s a possibility when our solicitor is saying it’s not. Surely they can take out this policy as otherwise their client is going to be unable to sell his house to a buyer who needs a mortgage?

No indemnity policies are in the sellers interest, yet they are forced to take them out to progress the sale. I would say whoever is feeding you that is just making stuff up. 

doodling

Hi,

The question that the seller needs to be asked is:

"What are you able to state with respect to the rentcharge?"

Based on the answer to that question, your solicitor can then attempt to find a suitable policy.  If no suitable policy exists then the seller needs to accept that the house is not mortgageable and it will need to remarked on that basis.

You can't expect the seller to lie (it appears that their solicitor is advising them not to anyway) and you can't expect your solicitor (who is also the lenders solicitor) to act outside the guidelines set by the mortgage company.

It may be worth exploring exactly what those guidelines say in case the solicitor is asking for more than the mortgage company requires, it might also be worth asking a decent mortgage broker whether different lenders have different requirements.

Brie

We had a similar issue when selling MiL's flat in that there was a form that needed to be filled out by the freeholder who didn't know any of the answers to the questions being asked.  Eventually we got their solicitor to sign the form on their behalf after providing all the answers ourselves (freeholder hadn't got one of these forms when they bought the place a year earlier but we had known the property for 30 years).  We were charged £600 (I think) by the solicitor but was the only way to progress the sale.  Maybe you could offer that as a suggestion?