Advice needed before exchange - pressure tactics from vendors?

Ash8765

Thanks so much. I asked my conveyancer about indemnity insurance for the alterations and this is what he said:

“The policy will cover you for any costs associated with a breach of the lease (failure to obtain consent for works) and any enforcement action the landlord brings. Enforcement action would involve you placing the property back into the pre-work position. There is no evidence of consent from the landlord.

If you make future alterations and obtain consent, this would potentially place the landlord on notice and void the indemnity insurance.”

First, this sounds like it could cause me a big problem if the landlord does take enforcement action? Presumably the freeholder (a company rather than LA) is out to make money so may try and request compensation or something. Does indemnity insurance cover that sort of thing?

Second, does this mean that I would be unable to make any future alterations to the property? I think this would really diminish its value as an investment.

The space has potential but I did have some changes in mind, including making the second bedroom bigger and (potentially) switching the kitchen and what is currently the lounge so that it can be an open plan kitchen leading on to the garden area. 

I understand that I would need freeholder consent for these and that it may not be granted or could incur fees. Being told at a later date that some alterations are not possible wouldn’t necessarily be a deal breaker. However, if I’m being told at this stage that such changes would be impossible (for me and potential future buyers) because of this previous breach, then this really gives me second thoughts about buying. 

Grateful for any advice on this point re the indemnity insurance and how it works. I’ve had trouble getting my conveyancers on the phone to explain the implications to me properly.

Thanks so much!

GDB2222

One point that hasn’t been mentioned: How keen are you to buy, and are you getting a good price?  

If you’re getting a bargain price then the vendor is reasonable in thinking that you should press ahead where you can. 

Ash8765

Hi all,

Just an update on this as my conveyancers have amended their advice. They’ve now said that if I wanted to make future alterations to the property and sought the freeholder’s consent, this would not be considered to be notifying them of the previous breach. It would be about future alternations, made in compliance with the terms of the lease. Therefore, it would not necessarily void the indemnity policy. If the Freeholder then noticed that the plans did not match the originals and wanted to take enforcement action, the indemnity policy would still cover me. If the Freeholder reviewed the proposed plans and provided the consent, this would bring everything up to date – resolving the previous breach.

Does this sound right? 

I want to stress test this last point with regards to future alternations. Requesting Freeholder consent for future alterations would likely involve submitting existing plans of the property. Could an argument be made that this is a de facto notification to them of the previous breach, even if this is not explicitly mentioned in the submission? 

For example, the Freeholder might notice the breach after taking time to compare the existing plans with the originals. In other words, would the indemnity policy would still hold if the Freeholder noticed the previous breach as a result of my submission to them?

It’s a really key point for me so I’m grateful for advice.

diggingdude

Could you just not throw back to the vendors that you want your questions answered or you will pull out? Don't understand why the pressure is on you. They will have incurred costs as well so surely want this to proceed.