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Albertthewolf
Posts: 1 Newbie
Dear all, I read few interesting articles concerning the advantages of indemnity insurance over a retrospective building regulations approval application. I am aware that there are precise restrictions concerning the disclosure of this specific insurance.
My question concern when a leaseholder wants to sell a leasehold flat which has a defective title indemnity insurance due to various breaches of building regulations.
My question is, to what parties shall the seller or his conveyance solicitor reveal that there is an indemnity insurance obtained and in place due to non-compliance with building regulations?
Shall this information be passed directly to the purchaser by the conveyancing solicitor of the seller or will be the conveyance solicitor acting for the purchaser that will have to pass this information to the perspective buyer?
Also, shall the details of the various breaches of building regulations passed to the seller with the defective title indemnity insurance by the purchaser's solicitor or by the seller's solicitor?
Thanks a lot for any advise you may provide.
Albertthewolf
My question concern when a leaseholder wants to sell a leasehold flat which has a defective title indemnity insurance due to various breaches of building regulations.
My question is, to what parties shall the seller or his conveyance solicitor reveal that there is an indemnity insurance obtained and in place due to non-compliance with building regulations?
Shall this information be passed directly to the purchaser by the conveyancing solicitor of the seller or will be the conveyance solicitor acting for the purchaser that will have to pass this information to the perspective buyer?
Also, shall the details of the various breaches of building regulations passed to the seller with the defective title indemnity insurance by the purchaser's solicitor or by the seller's solicitor?
Thanks a lot for any advise you may provide.
Albertthewolf
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Comments
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Albertthewolf wrote: »Shall this information be passed directly to the purchaser by the conveyancing solicitor of the seller or will be the conveyance solicitor acting for the purchaser that will have to pass this information to the perspective buyer?
If you're asking whether the seller's solicitor corresponds directly with the purchaser, the answer is no, that never happens in relation to anything as it's against solicitors' regulations. Any information would be passed to the purchaser's solicitor.
Not sure what you mean by this. Do you want to try again?Also, shall the details of the various breaches of building regulations passed to the seller with the defective title indemnity insurance by the purchaser's solicitor or by the seller's solicitor?0 -
Precisely what are the breaches of building regulations?
Indemnity insurance only covers legal costs, not the rectification of faults deemed so serious that the place is a danger to the inhabitants.
Examples might be a new roof supported by inadequate timbers, removal of chimney breasts downstairs without proper support for floors above.
If you are a potential buyer, find out straight away what these breaches are. If the seller won’t tell you, via his solicitor and your solicitor of course, you must seriously wonder what he’s trying to conceal.
A full building survey should give some clues, but won’t give the whole story.0 -
There is zero advantage of an indemnity policy over a retrospective building regs approval apart from if you are the seller.
It doesn't cover defective works, only if there is local authority enforcement action (very, very rare, in fact it would be interesting to see any statistics on this, seems like a bit of a ruse from insurers to get a bit more money for no risk)
The indemnity policy would only be set up and/ or transferred at the request of the purchaser (or their solicitor/mortgage company) I do not believe there is any duty on a seller to disclose any indemnity policies in place when they purchased the property. It comes down to doing due diligence.0 -
Yes I was asking whether the seller's solicitor corresponds directly with the purchaser and kindly you guys (David) suggested the answer is no, that never happens in relation to anything as he confirmed that any information would be passed to the purchaser's solicitor.
DUTY TO DISCLOSURE (?) FOR PROPERTY WITHOUT COMPLETION CERTIFICATE ?
Regarding the details of the various breaches of building regulations, if the details of the defective title indemnity insurance must be passed to the seller's conveyance solicitor with policy is there a legal duty from the seller's solicitor to provide the 'details' of the building or planning regulation 'breaches'?
For example, if the seller and his conveyance solicitor are aware that the breach is serious because the property for sale was converted without a completion certificate in a defective building where most (or even all) the flats were converted with major alterations and no one not have any valid completion certificate, is this an information that must be passed to the perspective buyer or is enough to report that there is a defective title indemnity insurance due to an non specified non-compliance with building regulations (but without clarifying what the details of the defect are)?
For example, in a defective building (with latent structural defects) with various converted flats with no completion certificates service charges will affect everyone and hence any serious defect may cause substantial repair bills. Hence, in a defective premises, the lack of compliance with building regulations (no completion certificates) would affect all the buyers.
In such a case, isn't the seller's (or his solicitor) obliged to reveal to the buyer that there are no completion certificates granted (the 'details' of the 'breaches') to the property for sale?
DUTY TO DISCLOSURE (?) FOR EXISTING DEFECTIVE TITLE INDEMNITY POLICY ALREADY IN PLACE ?
As for the disclosure of the defective title indemnity insurance policy how can such an existing policy be transferred in perpetuity at the request of the purchaser (or their solicitor/mortgage company) if neither the buyer or his solicitor are provided with information from the seller's solicitor that such policy exist? If there is no legal duty on a seller to disclose any indemnity policies in place when they purchased the property how can the buyer find out that such cover exist and rely on it if necessary?
Your responses have been useful to grab some understanding but I am still unclear about what must be disclosed to the buyer's or to his conveyance solicitor....0 -
The buyer spots the work which would have required consents and asks the seller for the consents. The seller says they don't have consents but they have the indemnity policy. The buyer decides whether the existing policy is sufficient or if they require additional insurance cover or would prefer retrospective consents (if those are possible).
Do you have a specific problem in mind or this just an academic exercise?0 -
There is no duty on the seller or the sellers solicitors to disclose that there was an indemnity in place or that no completion certificate has been granted. The onus is on the buyer to ask the pertinent questions0
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The buyer spots the work which would have required consents and asks the seller for the consents. The seller says they don't have consents but they have the indemnity policy. The buyer decides whether the existing policy is sufficient or if they require additional insurance cover or would prefer retrospective consents (if those are possible).
Do you have a specific problem in mind or this just an academic exercise?
Thank you David, I do have a specific issue to resolve but I am unclear as to what must be disclosed and what is not necessary to legally disclose to the buyer.....but before asking more questions I am trying to understand :question:the legal obligation to disclose key material facts of the essence to the perspective buyers
What is the structural defects are 'latent' and the buyer and his surveyor are unable to identify what needs to be rectified by way of remedial work?
Also, how would a buyer (or his solicitor) would know that a property doesn't have a completion certificate (latent legal defect) unless this is disclosed to the purchasing party?
Other than the seller, the only other parties aware of lack of completion certificates (latent legal defect) would be the planning department of the local authority and the owner (freeholder) of the premises.
And in such case of latent structural defect how can any buyer come to know that a defective title indemnity policy exist unless this is disclosed to his solicitor by the seller? :undecided0 -
:question:the_r_sole wrote: »There is no duty on the seller or the sellers solicitors to disclose that there was an indemnity in place or that no completion certificate has been granted. The onus is on the buyer to ask the pertinent questions
Are you saying that even if there is an indemnity insurance due to serious planning breaches and legal and structural defect due lack of compliance I do not have any obligation to reveal any information? I am aware of the caveat emptor principle (buyer alone is responsible) but if I am fully aware of such key information of the essence isn't this concealing (fraud) to the buyer?:shocked::question::shocked:
Also if the onus is on the buyer to ask the pertinent questions to whom the question must be directed, to the seller's solicitor, to the owner of the building or to the local authority?0 -
Alberthewolf wrote: »:question:
Are you saying that even if there is an indemnity insurance due to serious planning breaches and legal and structural defect due lack of compliance I do not have any obligation to reveal any information? I am aware of the caveat emptor principle (buyer alone is responsible) but if I am fully aware of such key information of the essence isn't this concealing (fraud) to the buyer?:shocked::question::shocked:
Also if the onus is on the buyer to ask the pertinent questions to whom the question must be directed, to the seller's solicitor, to the owner of the building or to the local authority?
The searches will reveal past Planning and Building Control applications. The buyer and their surveyor would see work that might need them. If there aren't any and should be, then questions will be asked.
Queries are directed to the vendor's solicitor for the vendor to answer. The vendor should reply truthfully, but the fact is that things like checking the structural integrity and for BCA and PPs are dealt with on the buyer's side and don't even need an answer from the vendor because it is all part of the buyer's due diligence.
Indemnity policies are rife. I'm sure that a significantly large double digit percentage of transactions involve one. Many only cover the vendor for the time they own the property. I'd say that the defects can't have been that bad (or not highlighted at all). if an indemnity policy was enough to satisfy their lender when they purchased.
It would be a lot easier to understand you if you were specific, rather than repeating random legalese and hoping we'll fill in the gaps. I find it hard to understand you. There's often more than one explanation available to people, or maybe just one, but it is case specific.
Building Control Approval and structural integrity are not mutually exclusive either, that is why it is incredibly important for buyers to do the homework that we all pay professionals to help us with. Purchasers and vendors have their own vested interests, that is why solicitors exist in house purchases.Everything that is supposed to be in heaven is already here on earth.
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Alberthewolf wrote: »What is the structural defects are 'latent' and the buyer and his surveyor are unable to identify what needs to be rectified by way of remedial work?
That's not going to be sorted by the indemnity policies we're talking about. If the buyer really can't figure out how to fix a structural defect then they probably shouldn't buy!
The buyer (with the advice of their surveyor and/or solicitor) identifies works which required a completion certificate and asks the question "do you have a completion certificate?".Also, how would a buyer (or his solicitor) would know that a property doesn't have a completion certificate (latent legal defect) unless this is disclosed to the purchasing party?
They won't. But if they've identified works which require consents (or an indemnity policy in their place) they'll have asked the question.And in such case of latent structural defect how can any buyer come to know that a defective title indemnity policy exist unless this is disclosed to his solicitor by the seller? :undecided0
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