Why would indemnity policy for covenants, rights and easements be needed?

NervyBuyer

Sorry, I have been unclear about my 'low risk' perception.

I wanted to get at the sort of reasons such insurance would be needed to see if there was a risk of those actual issues being a problem for me (not just the cost of them) - i.e. if there's something that could come up which would make the house unsuitable for me. It's that which I meant seems 'low risk' - since I only want to live there as it is, not run a business or build a swimming pool, it seems unlikely that covenants from 1870 would cause me practical trouble. I also now understand what's likely to be included in 'rights and easements'.

The fact the vendors' (solicitors) will not include the rights and easements rings a slight alarm bell but that's not really a problem since I can just pay for it myself.

You see a lot of stories about property sale/purchase insurance being rubbish e.g. for compensating you when one party pulls out. I wasn't sure if this sort of indemnity was in the same unclaimable category.

It's a cash purchase.

Thanks for your replies.

MyRealNameToo

NervyBuyer said:

You see a lot of stories about property sale/purchase insurance being rubbish e.g. for compensating you when one party pulls out. I wasn't sure if this sort of indemnity was in the same unclaimable category.

Totally different class of insurance. 

Chancelry Repair Insurance is possibly a bit of snake oil not because the claim wouldn't be paid out but that I am unaware of any claim ever being made (which would include a claim made and declined) but it is a theoretical risk and with a premium of £15 probably not worth worrying over. 

user1977

NervyBuyer said:

You see a lot of stories about property sale/purchase insurance being rubbish e.g. for compensating you when one party pulls out. I wasn't sure if this sort of indemnity was in the same unclaimable category.

It isn't.

You seem to be overthinking things. The point about such insurances is that you just get them and forget about it, instead of putting in lots of time/effort investigating the risks to the nth degree.

NervyBuyer

I don't think it's overthinking to be inquisitive about the potential contents of entirely undisclosed covenants. 

MyRealNameToo

NervyBuyer said:

I don't think it's overthinking to be inquisitive about the potential contents of entirely undisclosed covenants. 

It is actually something you need to be cautious about. 

If something has been done to the property and the seller can't provide evidence that it had planning permission or sign off etc you can again buy an indemnity policy to cover the risk. However as soon as you ask the council for evidence before buying the insurance is invalidated as its to cover the risk it might not be not to cover the known issue that it isnt. 

Had a similar one a while back where the reinsurance required the operations team to give a warranty that there were no known data defects that hadn't been disclosed. The ops director immediately started asking people to do overtime and check files but had to put an immediate stop to that because the warranty wasnt that there were no problems just that there were no known problems and so didnt obligate us to check but had we checked and found some (which would be inevitable) we'd then have to declare them... one of the cases where ignorance is not only bliss but money saving. 

sheramber

The vendor of a house we bought was moving to local bungalow.

At the last minute it was discovered there was a covenant that stated no house could be built on the ground.

The covenant was over 100 years old and nobody knew who now owned it.

The house  had been built many years before. 

The lender required an indemnity policy in case the owner of the covenant materialised. 

TBG01

NervyBuyer said:

I don't think it's overthinking to be inquisitive about the potential contents of entirely undisclosed covenants. 

They aren't undisclosed though. They are simply unknown.

The original owner of the land might have absolutely dispised the colour blue so included a covenant that said doors cannot be the colour blue. The original owner of the land might have absolutely despised vegetables so included a covenant that said no greenhouses are to be built on the land. The original owner of the land might have wanted the land to remain as it was at the time of sale so included a covenant to that effect.

Yes given the age of the missing document, there's next to no chance anyone would look to enforce any potential breach but if they did, the policy is there to financially protect you. 

Linton

The immediate value of indemnity insurance is that both buyer's and seller's solicitors can agree it with minimal time, effort and cost rather than arguing causing delays and possibly building up much higher costs. It also minimises the stress on the buyer who may add the issue to worries they already have about the purchase.

Slinky

If it's a terrace, are there adjoining properties that would likely have the same covenant? Could you buy copies of their deeds to see if they have details of a covenant? You couldn't be absolutely sure yours would be the same, but you'd at least have some clue as to what it may be.