Seller refusing to pay for indemnity policy

wittykitty24

We are very close to being all sorted to exchange but our sellers are refusing to pay for an indemnity policy for missing building regs for a garage conversion when it was originally done. 

This was done previous to them buying the property and since then the sellers have added a utility to the garage conversion where they have the most recent building regs certificate. Because they have this most recent certificate their solicitors are telling the sellers that an indemnity policy is not needed so they are now refusing to pay for this. 

The policy is £260 and we are already paying for an indemnity policy on the sale of our house and also repairs from a level 3 survey our buyer has requested, so we don’t really want to pay out for this (especially as it’s not our property yet). We’ve asked our estate agent to help (as both using same one) and explain our situation to the seller but to no avail.  

I wondered if anyone else has had this come up before and how it was resolved as we are now at a standstill until this is sorted? 

Flugelhorn

must say if the work was done that long ago then I wouldn't pay for an indemnity cert - what are they trying to indemnify against?

user1977

When were the works done? I’d be inclined to agree that there isn’t really a risk if the council have signed off more recent work (at least for building regs - would planning have been required?).

Bigphil1474

If they have a more recent building regs certificate, then chances are the previous work is covered. Technically it might not be, but if the Inspector visited, they would have flagged any concerns. If you're spending hundreds of thousands on a house why wouldn't you spend £260 on a policy your vendor doesn't see the need for? As above, what are you gonna get from it anyway - it's a garage?

wittykitty24

Flugelhorn said:

must say if the work was done that long ago then I wouldn't pay for an indemnity cert - what are they trying to indemnify against?

I know it is crazy as think it was done over 15 years ago and they have the most recent building regs certificate. Our solicitor has said it’s due to having no original planning for garage conversion and it is actually our lender asking for this indemnity policy. We are really not bothered to have one but our solicitor is adamant our lender wants one in place 😩

Exodi

Personally I'd just pay it if it's definitely mandatory - you paying for things related to your house or a survey is of no relevance to them, the circumstances could be totally different. How do you know they're not also paying for an indemnity policy on the house they're purchasing? Regardless, I can see why the buyer doesn't feel they should pay for it based on what you've said, I suspect many would be against paying it in the same circumstances, I certainly would.

£260 is likely less than 0.1% of the purchase price, if you're letting this halt the process I fear you're missing the forest for the trees.

DavidT67

Why should the owner / occupier / seller pay for something of no value to them !?  

The buyer is the one who needs it and gains value from it, so they should pay.

njkmr

As said , if purchase is not going to go through for the sake of £260 then I fear you will probably lose even more walking away at this stage.
Pay it and move on so to speak..
Not worth worrying over in the scheme of things .

Section62

DavidT67 said:

Why should the owner / occupier / seller pay for something of no value to them !?  

The buyer is the one who needs it and gains value from it, so they should pay.

The owner/seller is the one that has (potentially) done something wrong, or not checked carefully enough when buying.

The value to them is the ability to sell their property for the price they wanted, without having to jump through hoops proving there is nothing wrong, or getting retrospective consents.

Why should the buyer pay for someone else's mistakes? (although in cases of vendor intransigence it might be a good idea to to get the purchase done)

HHarry

Section62 said:

DavidT67 said:

Why should the owner / occupier / seller pay for something of no value to them !?  

The buyer is the one who needs it and gains value from it, so they should pay.

The owner/seller is the one that has (potentially) done something wrong, or not checked carefully enough when buying.

The value to them is the ability to sell their property for the price they wanted, without having to jump through hoops proving there is nothing wrong, or getting retrospective consents.

Why should the buyer pay for someone else's mistakes? (although in cases of vendor intransigence it might be a good idea to to get the purchase done)

Sorry but this is nonsense.

The Seller hasn’t done anything wrong, the work was carried out prior to their purchase.  And how do you know it wasn’t checked properly?  Maybe they were made aware but were cash buyers and gambled and chose not to get a policy.  Or their Lender didn’t require one.  Or the mass industry in indemnity policies hadn’t started.

The enforcement period for Building Control is currently 10 years, previously 2.  No-one can take any action for a lack of regs from 15 years ago.  And if it hasn’t fallen down in those 15 years it’s unlikely to now.

The fact that the Lender wants a policy is more nonsense - it’ll provide no benefit because no enforcement can be taken.  But it’s a requirement of the Buyers Lender, so I’m not sure why you think the Seller should pay.

Section62

HHarry said:

Section62 said:

DavidT67 said:

Why should the owner / occupier / seller pay for something of no value to them !?  

The buyer is the one who needs it and gains value from it, so they should pay.

The owner/seller is the one that has (potentially) done something wrong, or not checked carefully enough when buying.

The value to them is the ability to sell their property for the price they wanted, without having to jump through hoops proving there is nothing wrong, or getting retrospective consents.

Why should the buyer pay for someone else's mistakes? (although in cases of vendor intransigence it might be a good idea to to get the purchase done)

Sorry but this is nonsense.

'Nonsense' is a strong word.

HHarry said:

The Seller hasn’t done anything wrong, the work was carried out prior to their purchase.

Hence "potentially" and "or not checked carefully enough when buying".

However, the seller has had further work done during their ownership, for which - if they had been smart - they could have arranged the BR signoff in a way which covered the whole of the conversion and made the problem go away.

HHarry said:

And how do you know it wasn’t checked properly?  Maybe they were made aware but were cash buyers and gambled and chose not to get a policy.  Or their Lender didn’t require one.  Or the mass industry in indemnity policies hadn’t started.

Fair comment.  So please read "or not checked carefully enough when buying" as "or not checked carefully enough when buying, or took a gamble".

Are you suggesting the OP should now be responsible for the consequences of the vendor's gamble?

HHarry said:

The enforcement period for Building Control is currently 10 years, previously 2.  No-one can take any action for a lack of regs from 15 years ago.

The High Court would disagree with you. And the limit was previously 12 months, not 2 years.

And you may also have overlooked the OP's reference to 'planning'.

HHarry said:

And if it hasn’t fallen down in those 15 years it’s unlikely to now.

A myth.  The structural engineering equivalent of kicking tyres on a second hand car.

Structural failure can happen at any time, it is not limited to the period of construction and immediately after.  For example, steel fixings can corrode over time and then fail.  Timber can rot.  What was once strong enough to do the job can fail at some point in the future.  Compliance with building regs means making sure failures like that are avoided, or give occupants warning that something is wrong before catastrophic collapse.

And "fallen down" is one of the extreme possible outcomes - there are others of considerable concern which may also take time to become apparent.

HHarry said:

The fact that the Lender wants a policy is more nonsense - it’ll provide no benefit because no enforcement can be taken.  But it’s a requirement of the Buyers Lender, so I’m not sure why you think the Seller should pay.

If you are going to use the word 'nonsense' it is a good idea to make sure you know what you are talking about.

There is a theoretical risk that lack of BR signoff might pose a risk to the lender's security.  They can negate that risk by ensuring a suitable indemnity policy is in place.  Why would they take on the risk of vendor's gamble when a cheap indemnity policy would cover them?

I'm not saying the vendor should pay... I'm making the point that the argument the buyer should pay because the policy is of "no value" to the vendor isn't a sound one.  It can be argued either way.