This week I am fortunate enough to have another guest article from Stuart Reynolds Cert CII from Pi Property Insurance and it covers a topic which I am quite passionate about! Many of the properties I am involved with have their “quirks” – things which owners have taken for granted for many years for which the appropriate paperwork is not in place. Bring this property into the public arena and under the microscope of a purchaser’s solicitor and these issues always come to light. I have, for several years, repeatedly banged the drum about vendors and agents needing to work more proactively prior to a sale/during marketing to tackle these issues early. A health check if you like.
Given that the housing market is currently at a near standstill in the circumstances this time could be used productively in preparing a house or property for the market in conjunction with your professional advisors. If you have development or uses which you know don’t have planning consent for, look at how long they have been completed/occurring – a certificate of lawfulness, or a retrospective application could be a simple piece of paper to remove doubt in a sale. If you are about to consider an extension under permitted development, again a certificate of lawfulness can demonstrate to a purchaser that it is permitted and lawful.
Other things such as finding deeds, checking titles, registering property prior to marketing can really speed up the sale process. Getting to the market as quick as possible, agreeing a sale subject to contract and then sitting through a long period of issues before exchange and completion is enough to put the most dedicated of purchasers off. The work needs to be sorted out one way or another, why not tackle it head on and for anything you cannot solve cost effectively, look at Insurance Indemnities as outlined below!
What are Legal Indemnity Policies?
Legal Indemnity Insurance indemnifies property purchasers or mortgage lenders against issues arising on a property title or covenants & protects the Insured from property disputes & the potential losses & legal costs resulting from legal challenges to their property. Legal Indemnity Insurance is a specific type of insurance policy used in conveyancing transaction where there is some sort of legal defect which cannot be quickly resolved or in some cases cannot be resolved at all or it is reasonably unlikely to result in any loss but in the event that it does, there is potential for it to be a significant loss. It is estimated that about 20% of all property transactions now involve the purchase of at least 1 legal indemnity policy.
Examples of where cover could apply
For example, a missing landlord, lack of planning permission or building regulations approval or a lack of a right of way or easements, right to light claims etc. Unlike other types of Insurance policy for which regular premiums have to be paid & which need to be renewed periodically (usually annually) only one premium will need to be paid & the cover will last forever in most cases.
Claims example: A pain in the annex
The previous owner of a property had converted the garage into an annex the previous year and, while they had obtained planning permission, they hadn’t secured Building Regulations consent. We were happy to issue a policy for a premium of £200 for a limit of £550,000. But, less than a year later, Building Control were inspecting properties in the area and noticed that the garage had been converted without consent. They threatened to take enforcement action, and the policyholder made a claim against their policy in March 2017. After investigation, it was discovered that considerable work would be required to bring the annex up to the necessary standards. But, because it involved electrical works, improvements to the fire safety, and improvements to the boiler and heating systems, it meant that no one contractor could do the job. Rather than leave the policyholder to liaise with so many contractors, Insurers took care of organising the work. Despite the significant works required, they were fully completed by December. The Local Authority provided retrospective consent in March 2018. The entire cost of the works, £22,318, was covered by our policy, leaving the policyholder free to enjoy their annex.
Here are just a few of the covers that are available:
• Absence of easement
• Breach of restrictive covenant
• Chancel Repair
• Contaminated Land
• Defective title
• Forfeiture of lease
• Judicial review
• Missing beneficiary
• Missing deeds
If you have any questions about what cover is needed or how the cover can benefit you or a client, please call please call me Stuart Reynolds on 01789 761 664 or 07973790218 or Email me on stuart.r@pi-properytyinsurance.co.uk. For regular updates follows us on Twitter or LinkedIn
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