Indemnity Policy Query

wilsonh

I am currently in process of buying my first house. It is an end terrace with an unadopted back street running along the rear of the property. The house is leasehold with an absent landlord. There is already an indemnity policy in place to cover for the absent landlord. Through the searches our solicitor has discovered that there is no right of way on the back street and we have been informed that we must take out an indemnity policy for this. We have had a quote from Norwich Union for a policy which is approx £170. The seller is refusing to pay for the policy and we are being advised that without this policy we can not proceed. Please can anyone give me any advice? a)Should the seller pay for this policy and b) are there any other insurance providers who I could approach for a more competitive quote? Thank you!

subjecttocontract

Presumably the £170 is a one off fee for all time and transferrable to your future buyers when you sell. It sounds a very reasonable price and do you really want to spend a few hours chasing around to save £10 or £20 ?

Is the price of the property attractive givenm the current market sentiment ? If you are getting it on the cheap side swallow the cost, if your paying 'top dollar' explain to the sellers that they should at least pay half the cost.

Debt_Free_Chick

wilsonh wrote: »

My view

a)Should the seller pay for this policy

Why should the seller pay for something they think they don't need and, more importantly, will never be of benefit to them?

What, exactly, does the policy protect against?

wilsonh

Our offer was accepted at the end of Nov 07, we thought we got the house for a reasonable price but I guess since Nov the market has cooled slightly. Thank you for your advice about the cost of the policy. It is transferable from owner to owner.

At the moment the vendor doesn't legally have access to the back of the house because there is no right of way on the backstreet. Worst case scenario if the absent landlord was to sell the land where the unadopted road is located then they could potentially build on the land and we wouldn't be able to gain access to the rear of the property. Obviously the likelihood of this happening is very slim but nonetheless the risk is still there. I realise I am a naive FTB but in my opinion when the current vendor bought the property their solicitor should have advised them of this problem and indemnified them accordingly. It looks like we will just have to bite the bullet and pay!

subjecttocontract

If I were in your shoes I'd explain to the vendors either directly or thru your solicitor that this is an unexpected ADDITIONAL cost. This should have been pointed out at the start of the buying process as access to the garden is fundamental in any buyers uninterrupted enjoyment of the property.

Consequently I'd ask for them to contribute HALF the cost by dropping the sale price by £85. Put up a sound argument and say you expect them to meet half way.

Nothing ventured........

Debt_Free_Chick

wilsonh wrote: »

At the moment the vendor doesn't legally have access to the back of the house because there is no right of way on the backstreet. Worst case scenario if the absent landlord was to sell the land where the unadopted road is located then they could potentially build on the land and we wouldn't be able to gain access to the rear of the property. Obviously the likelihood of this happening is very slim but nonetheless the risk is still there.

So would the insurance do?

subjecttocontract

A Right of Way can be gained thru something called prescriptive rights. I'm not an expert but think it involves using it as a ROW for 20 years.

I assume the insurance policy will pay for any legal action/claim to formally assert the Right of Way should it become necessary in the future.

Richard_Webster

I realise I am a naive FTB but in my opinion when the current vendor bought the property their solicitor should have advised them of this problem and indemnified them accordingly.

That's basically the line that a buyer's solicitor would take, particularly in this sort of case where the issue (unlike say Chancel Repairs) has not newly erupted...

A policy would pay out to fight a case if the insurance company though it had a reasonable chance of success but otherwise would pay the loss of value by reference to the loss of the access.

Whether the policy is vital depends on the precise nature of the access and its present use by the seller. Where I practice we have a lot of terrace houses with tarmacked back lanes that people use for vehicular access. The streets are fully parked up with residents' parking restrictions so having the back access with the ability to use a garage leading off it or just a parking space in the back garden adds value to the property. In that sort of case the valuation would have added something for that vehicular access, so it would be vital to make sure it was legally secure.

If it is only a secondary pedestrian access so you can go the long way round and avoid taking the lawnmower through the house when you want to cut the grass in the front garden (if there is one) then it shouldn't be so significant. Obviously you may still want the policy but if the lender isn't actually insisting that the access is critical then you may simply take the risk yourselves.