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  • FIRST POST
    • Albertthewolf
    • By Albertthewolf 12th Apr 18, 3:10 PM
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    Albertthewolf
    Lack of Building Regulations & Defective Title Indemnity Insurance
    • #1
    • 12th Apr 18, 3:10 PM
    Lack of Building Regulations & Defective Title Indemnity Insurance 12th Apr 18 at 3:10 PM
    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
    Last edited by Albertthewolf; 12-04-2018 at 3:12 PM. Reason: larger fonts
Page 1
    • davidmcn
    • By davidmcn 12th Apr 18, 3:36 PM
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    davidmcn
    • #2
    • 12th Apr 18, 3:36 PM
    • #2
    • 12th Apr 18, 3:36 PM
    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?
    Originally posted by Albertthewolf
    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.

    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?
    Not sure what you mean by this. Do you want to try again?
    • camptownraces
    • By camptownraces 12th Apr 18, 5:38 PM
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    camptownraces
    • #3
    • 12th Apr 18, 5:38 PM
    • #3
    • 12th Apr 18, 5:38 PM
    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 wonít tell you, via his solicitor and your solicitor of course, you must seriously wonder what heís trying to conceal.

    A full building survey should give some clues, but wonít give the whole story.
    • the_r_sole
    • By the_r_sole 12th Apr 18, 8:51 PM
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    the_r_sole
    • #4
    • 12th Apr 18, 8:51 PM
    • #4
    • 12th Apr 18, 8:51 PM
    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.
    • Alberthewolf
    • By Alberthewolf 14th Apr 18, 7:41 PM
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    Alberthewolf
    • #5
    • 14th Apr 18, 7:41 PM
    • #5
    • 14th Apr 18, 7:41 PM
    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....
    Last edited by Alberthewolf; 14-04-2018 at 7:53 PM. Reason: Amending by adding a question
    • davidmcn
    • By davidmcn 14th Apr 18, 7:47 PM
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    davidmcn
    • #6
    • 14th Apr 18, 7:47 PM
    • #6
    • 14th Apr 18, 7:47 PM
    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?
    • the_r_sole
    • By the_r_sole 14th Apr 18, 7:56 PM
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    the_r_sole
    • #7
    • 14th Apr 18, 7:56 PM
    • #7
    • 14th Apr 18, 7:56 PM
    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
    • Alberthewolf
    • By Alberthewolf 14th Apr 18, 8:15 PM
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    Alberthewolf
    • #8
    • 14th Apr 18, 8:15 PM
    Structural and legal defects are latent - What to disclose to the buyer?
    • #8
    • 14th Apr 18, 8:15 PM
    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?
    Originally posted by davidmcn
    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 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?
    • Alberthewolf
    • By Alberthewolf 14th Apr 18, 8:21 PM
    • 15 Posts
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    Alberthewolf
    • #9
    • 14th Apr 18, 8:21 PM
    Disclose or Conceal ?
    • #9
    • 14th Apr 18, 8:21 PM
    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
    Originally posted by the_r_sole
    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?

    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?
    Last edited by Alberthewolf; 14-04-2018 at 8:23 PM. Reason: adding text
    • Doozergirl
    • By Doozergirl 14th Apr 18, 8:36 PM
    • 25,591 Posts
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    Doozergirl


    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?

    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?
    Originally posted by Alberthewolf
    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.
    • davidmcn
    • By davidmcn 14th Apr 18, 8:36 PM
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    davidmcn
    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?
    Originally posted by Alberthewolf
    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!

    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?
    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?".

    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?
    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.
    • deannatrois
    • By deannatrois 14th Apr 18, 9:51 PM
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    deannatrois
    We are just a forum. We are not solicitors or legal property experts in the main. These are questions you need to ask your solicitor. Sometimes people can be emphatic and seem to know what they are writing, but later on you discover that the information wasn't correct. You don't know who an individual is, or how accurate what we say is.

    Plus, for obvious reasons the answers have to be generalised because we don't know exactly what you are concerned about. A small thing can change the accuracy of an answer where legal matters are concerned.

    Ask a solicitor with property expertise. If you don't want to ask your conveyancer, go to another one.
    Last edited by deannatrois; 14-04-2018 at 9:53 PM.
    • Doozergirl
    • By Doozergirl 14th Apr 18, 9:59 PM
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    Doozergirl
    If they're going to ask anyone, it would be helpful for the OP if it were in a direct manner!
    Everything that is supposed to be in heaven is already here on earth.
    • Nebulous2
    • By Nebulous2 15th Apr 18, 7:16 AM
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    Nebulous2
    There are a lot of possible overlapping ways for questions to be generated. If viewing many people will ask whoever is showing them round, "do you have planning and a completion certificate for that bedroom in the loft?"

    I've been looking at a lot of surveys recently and they often point things out. " An extension at the back appeared to be around 10 years old. A buyer should satisfy themselves that appropriate planning consents , building control and completion certificates are available."

    All of that stuff is then fed to the buyers solicitor who will ask for it in excruciating detail from the sellers solicitor. I'd say the chance of them missing the need for a certificate on a flat conversion is close to nil.

    I've never gone beyond that - but the starting point for a buyer or their solicitor is likely to be a demand that a certificate is now applied for and provided. The sellers solicitor is likely to counter by offering to pay for an indemnity policy. The buyers solicitor may well advise the buyer or even their lender, not to proceed on that basis.

    Some stubborn buyers who have become attached to a property may go ahead anyway.

    So if I've understood you correctly there are a lot of hurdles to cross to get to a sale.
    • Alberthewolf
    • By Alberthewolf 17th Apr 18, 3:07 PM
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    Alberthewolf
    Every case is unique and sometimes matters can be very complex....
    There are a lot of possible overlapping ways for questions to be generated. If viewing many people will ask whoever is showing them round, "do you have planning and a completion certificate for that bedroom in the loft?"

    I've been looking at a lot of surveys recently and they often point things out. " An extension at the back appeared to be around 10 years old. A buyer should satisfy themselves that appropriate planning consents , building control and completion certificates are available."

    All of that stuff is then fed to the buyers solicitor who will ask for it in excruciating detail from the sellers solicitor. I'd say the chance of them missing the need for a certificate on a flat conversion is close to nil.

    I've never gone beyond that - but the starting point for a buyer or their solicitor is likely to be a demand that a certificate is now applied for and provided. The sellers solicitor is likely to counter by offering to pay for an indemnity policy. The buyers solicitor may well advise the buyer or even their lender, not to proceed on that basis.

    Some stubborn buyers who have become attached to a property may go ahead anyway.

    So if I've understood you correctly there are a lot of hurdles to cross to get to a sale.
    Originally posted by Nebulous2
    Thank you to everyone who has really tried to help, in reality I have been unable to ask a direct question because the matters behind my initial questions are rather complex and intricate.

    I will do my best to ask few questions at the time but it is difficult to make the right questions in a very complex legal situation where many parties are involved.

    Perhaps, this simple question may help to start unravelling the complexity on this matter I am interested in.

    PREAMBLE:
    Two adjoined houses were converted into flats several times between 1993 and 1994. The major alteration works as a whole are not considered complete in respect to Building Regulations but three flats were signed off and as result 3 completion certificates were granted in 1993 and shortly after two more conversions were built to form 2 other flats in basements of these two adjoined houses with one (or two ?) additional completion certificate was issued in 1994.

    This gives a total of 4 (or 5 ?) completion certificates issued in total.

    However, later on these converted premises underwent a number of other major alteration works without permission or inspection resulting in 9 converted flats with 8 out of 9 of these converted flats crammed in two four-storey buildings.

    Conversion flats were built within the two existing roofs adding substantial weight and altering fundamentally the original structure of the two adjacent (adjoined) houses after these 4 (or 5 ) certificates were granted between 1993 and 1994.

    The actual structure of the converted 2 four-storey building is now so different that the local councilís records are unable to identify which flats the existing certificates ( granted in 1993 and 1994) relate to.


    QUESTION:
    Since the building underwent a number of multiple major alterations which resulted in 9 converted flats but there are only 4 or 5 completions certificates granted before the additional alterations is the local authority under the duty to pass this information to the perspective buyers and their solicitors?
    • davidmcn
    • By davidmcn 17th Apr 18, 3:17 PM
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    davidmcn
    It would help if you told us which party (if any) you are in this scenario and why you're asking. But anyway...

    is the local authority under the duty to pass this information to the prospective buyers and their solicitors?
    Originally posted by Alberthewolf
    The local authority is under a duty to make their records available to anybody who asks to see them. If there are gaps in the records, that's something which everyone has to live with.
    • Alberthewolf
    • By Alberthewolf 17th Apr 18, 5:03 PM
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    Alberthewolf
    Building regulations and health & safety - (?)
    It would help if you told us which party (if any) you are in this scenario and why you're asking. But anyway...


    The local authority is under a duty to make their records available to anybody who asks to see them. If there are gaps in the records, that's something which everyone has to live with.
    Originally posted by davidmcn
    ==================================

    Thank you David, you seem to know quite a bit on this matters,

    I am puzzled because the local councilís records are unable to identify which flats these certificates relate. If this is the case and the council's records are entirely inaccurate how can the correct information (and truth) be passed on the buyers?

    If a resident ask "Can you please let me know if my home has a completion certificate", how can anyone provide the answer if the local council records are inaccurate and outdated?

    At the same time when a conveyance solicitor run a local search, how can the the local authority provide the correct answer if their own records do not have the information?

    What if someone had built more flats inside Greenfel Tower and the council is now asked the question?!? Aren't they meant to answer?!?
    • davidmcn
    • By davidmcn 17th Apr 18, 5:11 PM
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    davidmcn
    The council's records are what they are. If they don't include sufficient information to clarify the position then I'm not sure how anyone (including the council) can remedy that now.

    But what is the actual problem? It's much too late now for the council to enforce any lack of certification (especially if it's arguable that the works were in fact consented to). If there are any practical problems arising from e.g. poor quality work, those will have manifested themselves in the past quarter century.

    And even if there were consents from 1993, that doesn't mean that nothing else has been done to the property since then.
    • the_r_sole
    • By the_r_sole 17th Apr 18, 5:13 PM
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    the_r_sole
    what is your interest in this - it's like pulling teeth?!
    can you just say what information you need and why, it's an endless stream of consciousness with some vague questions in amongst it.
    The local authority will only have records of building work that they have been notified of, they don't have someone going in and out of every house checking who's done what, the onus is on the developer to comply with statutory duties, if the information isn't there it isn't there, this makes it difficult sometimes with lenders. There is no duty on anyone to disclose anything unless they are asked about it.
    • Alberthewolf
    • By Alberthewolf 17th Apr 18, 5:57 PM
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    Alberthewolf
    what is your interest in this - it's like pulling teeth?!
    can you just say what information you need and why, it's an endless stream of consciousness with some vague questions in amongst it.
    The local authority will only have records of building work that they have been notified of, they don't have someone going in and out of every house checking who's done what, the onus is on the developer to comply with statutory duties, if the information isn't there it isn't there, this makes it difficult sometimes with lenders. There is no duty on anyone to disclose anything unless they are asked about it.
    Originally posted by the_r_sole
    Please be patient. The matter is complex and it is not easy to identify the right responsibilities, hence various questions.

    "QUOTED: .....they don't have someone going in and out of every house checking who's done what..." ----> true, but what the alteration consist in major works and 3 converted flats are built on top of a house making it into a 4 storey building and a garage is transformed in a 3 storey building with no compliance with building regulations and no planning applications? These are not small works, right? What is there are serious structural hazards involved or no fire escape routes and other serious hazards due to all the pipes that must be built for 4 or 5 additional homes and crammed where before there was only a ground-floor and 1st floor Victorian house? And what if all these major alterations are posing serious hazards but are not visible from outside and are latent?


    A - If the local authority is aware that there are 9 converted homes (flats) but only 4 or 5 certificates isn't the local authority bound to pass this information to the conveyance solicitor? (or anyone who makes the request to obtain the information)

    B - Is the council legally bound to pass the correct information (data) in its records to the buyers or any member of the public who has legal and financial interest in the information?

    C - Has the legal owner of the converted building a legal duty to inform the council or the buyers' solicitor if he/she knows the truth?

    If you just answer 'yes' or 'not' maybe is easier ask the right questions

    I hope that someone has the answers we are seeking.....
    Last edited by Alberthewolf; 18-04-2018 at 6:12 AM. Reason: adding text
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