Restrictive covenant and indemnity insurance

[sw65]

Who should pay for the restrictive covenant insurance and indemnity insurance for a breach of covenant on a house extension and an extension without building regs approval? Seller or buyer?

How much should it approximately cost for each policy on a house selling for £200,000?


Advice needed please

[smartlawyer]

hi

As the title is defective, the current owner should pay for the policy. Don't let any one tell you anything different.

Importantly, you must be satisfied that the works carried out are stucturally sound.

The policies in reality are worthless and your solicitor should be able to advise you as to the reasons why.

As to costs- say approx £200 but ask your solicitor to ask for the fee scale from Guaranteed Coveyancing Solutions Ltd.

Hope this helps

[Valman]

If the house is leasehold, the vendor should oay as they want to sell. However, a restrictive covenant can be challenged at the lands Tribunal and struck out if it does not benefit the land - usually the use of it, such as privacy - if it is only about the extension of the house and the use of the whole land, it should not prove difficult to have it removed.

The same should be for freehold houses but please, please, please contact a specialist solicitor who should be able to immediately advise without recourse to counsel (a barrister, who will charge you for his/her advice).

Good luck

Valman

[Richard Webster]

The cost of getting a restricitive covenant amended or removed at the Lands Tribunal is going to be an awful lot more than an indemnity policy.

I wouldn't agree that a restrictive covenant indemnity policy is useless but this is effectively true for building regulation policies - they only cover losses resulting from enforcement action which is extremely unlikely to happen in most cases, and do not give any protection if there is a structural failure at the property because of lack of compliance with the regulations.

[Simon Seaton]

Originally Posted by Richard Webster

I wouldn't agree that a restrictive covenant indemnity policy is useless but this is effectively true for building regulation policies - they only cover losses resulting from enforcement action which is extremely unlikely to happen in most cases, and do not give any protection if there is a structural failure at the property because of lack of compliance with the regulations.

I agree. I am however not convinced that Indemnity Insurance is a waste of money for lack of BRA. How do you propose to get round the lender's requirements for BRA if not with Indemnity Insurance?

Dont get me wrong, I would love the CML and lenders to agree that in the event of a satisfactory Home Buyers Report ( and provided the works were done more than a year ago ) the lender should not consider this to be a problem. Without such clarification and without retrospective consent ( which is far from ideal ) Indemnity seems the only way forward for the time being.

Would be interested to hear your view as it always interesting to get a different take on these issues.

[JustinN]

I agree with Simon Seaton, except that, if the work was done more than a year ago and seems structurally sound, I reckon the Buyer should pay for the indemnity insurance: the insurance only needed to satisfy the Buyer's lender, not because there is an underlying "real" problem

[Richard Webster]

Quote:
Originally Posted by Richard Webster (Restrictive covenant and indemnity insurance)
I wouldn't agree that a restrictive covenant indemnity policy is useless but this is effectively true for building regulation policies - they only cover losses resulting from enforcement action which is extremely unlikely to happen in most cases, and do not give any protection if there is a structural failure at the property because of lack of compliance with the regulations.

I agree. I am however not convinced that Indemnity Insurance is a waste of money for lack of BRA. How do you propose to get round the lender's requirements for BRA if not with Indemnity Insurance?

Dont get me wrong, I would love the CML and lenders to agree that in the event of a satisfactory Home Buyers Report ( and provided the works were done more than a year ago ) the lender should not consider this to be a problem. Without such clarification and without retrospective consent ( which is far from ideal ) Indemnity seems the only way forward for the time being.

Would be interested to hear your view as it always interesting to get a different take on these issues.

I agree with Simon that this is the practical result - we need the BR policies - and I routinely ask for them/advise clients to concede them because of this CML factor - but isn't it so annoying that the lenders do not live in reality on these issues? Logically they should not be lending on many old properties with features that would be substandard by modern BR standards, but of course they are not logical!

[JustinN]

It's just a "box-ticking" exercise for the lenders - and if the conveyancer has not ticked all the boxes, they get hammered, whether or not the un-ticked box is the cause of any loss :-(