Indemnity Policy - who should pay?

Stevo1977

Hi all,

We are in the process of buying a house and we are due to exchange on Monday.

Now today we have found out from our Lenders(Halifax) that the surveyor has said there needs to be an Indemnity Policy in place for the extension on the property(no planning permission or building regs were applied for), which was done approx. 20 years ago by a previous owner(not the current owners). This policy is going to cost £230 and my solicitor says that the vendors should be responsible for this and have it in place when we complete. The extension is only small, approx. 3m x 3m.

The seller's solicitor is saying that they should not have to pay this and it is down to us as it is our lender that is insisting on it, we should be liable. My mate, who is an estate agent(not involved in our buying or selling) said that in cases like this we are well within our rights to expect the sellers to pay for it.

So my question is - who should pay this as we are a bit stuck and I don't want my pants pulled down over it!

Any help would be appreciated!

Andy_L

Tradationally the seller pays. However I beleive that's custom rather than law so in your case it's down to who blinks first.

scope

Normally the seller..

I bought insurance when our buyer insisted on to get one for our old conservatory. This is normally done on day of completion (exchange?).

Stevo1977

Andy_L wrote: »

Tradationally the seller pays. However I beleive that's custom rather than law so in your case it's down to who blinks first.

Thanks for both replies - think I might try and stick to my guns on this one and see what happens - or at least reach some kind of compromise!

chappers

Its normally the vendor as they have to show willing that either it may have been them who built the "dodgy" extension without permission or they are basically the ones who are saying the extension has been there for x number of years without any problem.
Nowadays you seem to be able to buy indemnity from just about any possible outcome, has anybody ever had to claim against any such policy as I basically wonder if they are worth the paper they are written on, I believe they cover you for any costs involved in complying with BC if they take action against you, not the actual rectification costs if they make you do anything, they can't make you bring the extension upto current regs.
You are safe from planning(which you almost certainly wouldn't have needed for such a small extension)and building control wouldn't enforce anything from 20 years ago. They would probably put that in writting to you if you could prove the works were carried out then.
Solicitors and lenders have gone barmy over this and the only people winning are the insurers, where does it stop are they going to want indemnity for a 19th century extension to a Tudor property. Soon its going to be standard policy put your house on the market , get a fcuking HIP, buy the standard indemity insurance pack and away you go.

Stevo1977

chappers wrote: »

Its normally the vendor as they have to show willing that either it may have been them who built the "dodgy" extension without permission or they are basically the ones who are saying the extension has been there for x number of years without any problem.
Nowadays you seem to be able to buy indemnity from just about any possible outcome, has anybody ever had to claim against any such policy as I basically wonder if they are worth the paper they are written on, I believe they cover you for any costs involved in complying with BC if they take action against you, not the actual rectification costs if they make you do anything, they can't make you bring the extension upto current regs.
You are safe from planning(which you almost certainly wouldn't have needed for such a small extension)and building control wouldn't enforce anything from 20 years ago. They would probably put that in writting to you if you could prove the works were carried out then.
Solicitors and lenders have gone barmy over this and the only people winning are the insurers, where does it stop are they going to want indemnity for a 19th century extension to a Tudor property. Soon its going to be standard policy put your house on the market , get a fcuking HIP, buy the standard indemity insurance pack and away you go.

You have echoed my thoughts exactly - thanks for your opinion. I am going to try and contact the surveyor and see if the building regs is really necessary for an extension that old. If not, then the insurance premium comes down to about £75 which is something I can live with...

chappers

If the building regs is not necessary then there surely isn't an indemnity issue so you shouldn't be taking out a policy.
There definitly isn't a planning issue as the building has been up for more than 4 years.

General_Mayhem

It should be the vendors who pay, but it is often whoever melts first.

In our case it was the vendors at the top of the chain (we were ftb'ers at the bottom) who paid for our vendors indemnity policy.

olibrofiz

Been in a similar situation twice, both times the seller paid for the indemnity

Richard_Webster

If the work was done 20 years ago it will be immune under Planning Law. Indemnity policies for Planning are more expensive than just for Building Regulations. If it was just for Building Regulations then one leading company will do a policy for a property worth £650000 to £700000 for £240, so I suspect the solicitor is being silly. You should only need a policy at all in respect of Building Regulations and that is because of mortgage lender stupidity.

The whole thing is stupid because there is no realistic prospect of any action being taken at all after 20 years but for some unknown reason the lenders will not understand this. The seller should pay for it but it is usually the case that the time getting the lender to say that the policy is not wanted (and it probably won't say that) is such that the average buyer is prepared to pay for a policy if the seller will not do so.

See my post in this thread which explains the point in more detail:

http://forums.moneysavingexpert.com/showthread.html?t=715485

chappers

Some very interesting points in your linked post.
At what point is there a cut off, will they insist on going back to the start of the building regulations(which would be 1845 in London), because if not then where does it all end and more to the point how do they determine when works were really carried out.

More important though is if insurers are going to be so uptight, say what if your house fell down and there were no completion certificates for any works carried out. Would they pay up and if they would why are lenders demanding these indemnities.