Occasionally when moving home you may come across a problem where certain important paperwork is missing. This issue is certainly not uncommon and does not mean the end of the road for your transaction. Often a simple indemnity policy can overcome the problem and allow your transaction to proceed as planned.
Topics to be answered in this article
What does indemnity insurance cover?
An indemnity insurance policy will cover you or your buyer against the financial impact of any remedial works or action required in respect of missing information or documents for a property.
Common types of indemnity policies
Indemnity policies can cover a variety of issues, most commonly these include:
Lack of Building Regulations Indemnity Policy
This policy will cover you if the final Building Regulations sign-off is missing for any works carried out to a property, including the installation of a gas boiler or the installation of new windows and doors.
Lack of Planning Permission indemnity policy
This policy will cover you if a necessary planning permission is missing for any works carried out to the property
Breach of Restrictive Covenant indemnity policy
Some properties have certain restrictions contained in their title deeds, for example, preventing additions to a property without the written consent of the original owner. The policy will provide cover if there is no evidence of consent.
Missing Information indemnity policy
This policy is provided when there are missing deeds for a property which may contain important unknown information, for example, any rights neighbours may have over the property.
How much does indemnity insurance typically cost?
Indemnity policies are an inexpensive solution to issues which could prevent a sale and purchase, or at the very least, considerably delay matters.
Depending on the value of the property, indemnity policies cost in the region of £100 – £300, which is a small expense when considering the overall cost of moving home.
Who should pay, buyer or seller?
Traditionally, it is the sellers responsibility to provide indemnity policies to the buyer, as they are obliged to provide all relevant documents relating to the property as part of the sale.
However, it is not uncommon for a buyer to purchase their own indemnity policy in order to speed matters along, and there is certainly nothing to be lost in buyers doing so.
Can you pass on an existing policy to a new owner?
Although an indemnity policy may be in your name, they are designed to be passed on to all future buyers of a property. However, be aware that if a property has significantly increased in value, a “top up” policy may be required to cover the new value.
Things to watch out for (and common mistakes)
Although an indemnity policy will cover you for the financial impact of any remedial works required in respect of missing information or documents, it will not, for example, cover you for any defects in the works carried out. You must rely on your own independent survey in this respect.
You must also not reveal the existence of an indemnity policy to a third party. If you do, you will not be able to make a claim under it. For example, if a property is missing Planning Permission documents and an indemnity policy is put in place to cover this, you must not alert the Local Authority as to the existence of the policy.
Further, if you are missing documents for a property, unless you are certain the documents exist, do not contact the relevant authorities to query their whereabouts. This may put them on notice as to a potential breach whereby they could start enforcement action against the property owner. It will then no longer be possible to put an indemnity insurance policy in place.
How can Goughs help?
If you are having issues or worried about missing information or documentation for your property, or a property you are looking to purchase, please give your local Goughs office a call so we can discuss how a simple indemnity insurance policy could solve your problem.
Alternatively, you can get a bespoke free conveyancing quote.