Buyer's lender raising Section 38 / road adoption issues – anyone experienced this?

kimber95s3

Hi all,

I'm hoping someone has been through something similar and can share their experience.

We're currently selling our house on a relatively new-build development (less than 5 years old). The estate roads have not yet been adopted by the local authority and the Section 38 Agreement has not been completed.

The council has confirmed in writing that road adoption is intended to proceed and that previous issues delaying the process have been resolved. However, they cannot provide a definitive timescale for adoption. The developer remains responsible for maintaining the roads in the meantime.

Just add some info - the estate already has a management company called Remus

Our buyer's original lender raised extensive enquiries about the lack of a completed Section 38 and ultimately the buyer switched lenders. The new lender is coming to do a mortgage valuation and our buyers solicitors are considering whether an indemnity insurance policy would be acceptable.

What is worrying us is that we're hearing lenders may be becoming stricter regarding unadopted roads and outstanding Section 38 agreements. We're concerned that if this sale falls through, future buyers could encounter the same issue and house property is essential unsellable and we are stuck here until the road has been adopted which could be years!!

Has anyone:

• Sold a property where the roads hadn't yet been adopted?
• Had a lender raise concerns about a missing or incomplete Section 38 Agreement?
• Successfully completed a sale using indemnity insurance?
• Found that some lenders were willing to proceed while others were not?
• Experienced this on a Barratt, Persimmon, Taylor Wimpey, Bellway or similar development?

I'd be particularly interested to hear from homeowners, conveyancers, mortgage brokers or anyone who has dealt with this recently.

At the moment we're trying to understand whether this is becoming a common issue or whether we've simply encountered a particularly cautious lender.

Thanks in advance for any advice or experiences.

RelievedSheff

Is there are clause in the land transfer similar to the below:

If there is point it out to the buyers solicitors.

This really should be a none issue but seems to be getting flagged more and more. We had to point this clause out to our buyers solicitors recently as well. Our sale went through in March of this year.

No indemnity policy was taken out in our case as the original developers had already indemnified the original purchasers and all subsequent owners.

GixerKate

it took about 5 years for the roads to be adopted on our development, in that time a number of properties have been bought and sold without issue. What is the concern that has been raised by the lender? it should be a non-issue for the homeowner - the developer maintains the estate until adoption by the local council, the homeowner isn't involved.

penners324

I lived on ab estate that's now been there for 30 years, roads are still not adopted. There must be 1000 houses on it.

Plenty of house sales still happening

kimber95s3

https://forums.moneysavingexpert.com/discussion/comment/82071433#Comment_82071433

I dont know the specifics but form what our solicitor was saying….Apparently the lender sees it as a risk because the developer could go bust but if I’m honest I think the council is more likely to have financial trouble if they haven’t got so already.

RelievedSheff

https://forums.moneysavingexpert.com/discussion/comment/82072403#Comment_82072403

That should also be a none issue as the council holds a bond from the developers to pay for the roads in those circumstances.

The bond is released back to the developer once the roads are adopted.

Section62

https://forums.moneysavingexpert.com/discussion/comment/82072511#Comment_82072511

It can be an issue though if there is an issue with the road to be adopted and the bond amount isn't enough to cover the required work, or if money alone is not enough to resolve the issue.

monkey-fingers

https://forums.moneysavingexpert.com/discussion/comment/82071492#Comment_82071492

Mine is 67 years old. Same.
Lender couldn't care less.