Indemnity to cover breach of 106 agreement

[mattcarms]

I am in the process of buying a home which has an internal garage converted into a lounge. The sellers agreed that it would make a nice ensuite bedroom for my mother-in-law who needs to be on the ground floor.
Recently, I saw a copy of the deeds which referred to a 106 agreement. This states that the garage cannot be converted to living accommodation.
The sellers are now saying that they can get an indemnity policy to cover this issue so that we can exchange.
Please can anyone advise me whether such a policy is likely to be acceptable to my mortgage lender and what the likelihood is of the local authority serving an enforcement notice to return it to a garage as per the 106 agreement?

[brian]

Try calling a local solicitor who specialises in residential property law - you really need professional advice on your individual situation.

2c.

[iamthecod]

Dear Matt,

A section 106 agreement is effectively a bribe from a local authorities plnning department, you can do this if you don't do that. On larger more commercial scales they make developers build nw roads, schools, hospitals, parks, trin stations etc using 106's!

If it is recorded inside your deeds (title register) it is most likely the case iit is recorded as a restrictive covenant and therfore runs in successor in title unless otherwise stipulated. The local authority will derive the benefit of the covenant as it is based upon their 106.

As for insuring against it - not on your nelly. Insurance against any form of agreement within your deeds is placed upon:

can the benefactor be found
is the covenant going to be breached
is the covenant recorded correctly

the insurance company seeks counsels opinion (gets a barrister to advise) on whether the restrictive covenant or agreement is enforceable against the current breach, who my derive the benefit of the covenant and so forth. If the barrister effectively says - no chance of enforcement they charge you a premium to 'insure' you against this non existent risk, if there is a risk of enforcement they will not provide it at all or request the value of the established work (i.e. the same value as you conservatory or similar).

Without wishing to cotradict Brian, a solicitor is simply not up to task when seeking advice on such a mattter, you require a barrister on at least 15 years call to get a diffinative opinion.

i hope this helps

[Richard Webster]

Insurance against any form of agreement within your deeds is placed upon:

can the benefactor be found
is the covenant going to be breached
is the covenant recorded correctly

the insurance company seeks counsels opinion (gets a barrister to advise) on whether the restrictive covenant or agreement is enforceable against the current breach, who my derive the benefit of the covenant and so forth. If the barrister effectively says - no chance of enforcement they charge you a premium to 'insure' you against this non existent risk, if there is a risk of enforcement they will not provide it at all or request the value of the established work (i.e. the same value as you conservatory or similar).

Whilst it is true that if there is real likelihood that the covenants will be enforced insurance will be difficult to get, and because s106 are rather specialist, the indemnity insurance market may not do a policy other than on a bespoke basis, I think the last poster's comments are far too wide.

Typically if there is a breach of say a restrictive covenant that's more than a year old and nobody involved knows of any claims being made by people possibly entitled to enforce it, a solicitor can take a policy form out of a looseleaf, fill it in, sign it on behalf of the insurance company and send off a cheque to the insurance company or copmplete na online form with similar effect and get instant cover. Policy done. None of this stuff about taking Counsel's opinion.

Years ago policies weren't available if the potential enforcer was known but that doesn't apply now, as long as they are not contacted.

As a conveyancing solicitor I believe the information given in the post to be useful but I accept no liability except to fee-paying clients