Indemnity insurance

[kai1]

I'm currently in the process of buying a flat which is part of a grade 2 listed Georgian building conversion (it's also share of freehold). The seller had certain work done to the flat, including the replacement of the sash windows. I've already found out through the estate agent that the seller didn't obtain listed building consent to do this, and my solicitor is waiting both for formal confirmation of this and also to find out whether the seller even got permission from the management agency (which is also apparently required).

My solicitor has advised that if it turns out that no listed building consent was obtained for the windows, I will need to take out indemnity insurance, which can prove to be expensive.

Has anyone got similar experience of this type of thing? It seems completely unfair that I should be financially penalised for something that wasn't my fault. Also, I hadn't heard of indemnity insurance before, would it be best to take this out in any case?

 

[Juju]

If you search on indemnity insurance on the forum, you should find previous postings on the subject. I think people aren't convinced that they have much standing, ie you can't indemnify against a criminal act, but they're certainly becoming common now.

By the way, you shouldn't have to pay for it - the owner of the house you're buying is responsible for it. Well, that's what happened to me - I hadn't realised till after moving in, that my solicitor had pushed the issue and the previous owners had agreed and paid for it.

 

[biffvernon]

Work out what the cost of reinstating the right windows will be and suggest that the price of the house is reduced by that much. And if that doesn't work, make sure you can can afford that cost added on to the purchase price.

Insurance is for the unexpected event, not the expected.

 

[stickybeak]

.

 

[biffvernon]

In any case, you should get the price reduced by at least the full cost of replacements and all the services associated (fitting, delivery etc) and could try for an additional element for the time you'll be spending in correcting his actions.

And allow another prospective purchaser to gasump the house you've set your heart on. Hey, life's a risk!

 

[lindy]

We had to get an indemnity policy as the house we bought was sold under probate and the searches and investigation could only find planning permission but nothing regarding meeting building regs.

Basically, my solicitor sorted this out with the other solicitor and the sellers estate paid for it (its a one off payment by the way not an annual thing). My mortgage lender insisted I got the policy and would not lend without it so if they had not played ball I would have had to pay for it myself. I think it was approximately £200, I will check later and let you know if its different.

I was told not to bother trying to change things retrospectively as long as the surveyor was happy with it structurally, as the regs would have changed since they were done anyway. I was told this by my local planning officer!

 

[Nemesis]

There's a difference between things done without Planning Permission/Building Regs (for which there is a time limit for enforcement) and things done to a listed building without LBC (which is a criminal offence for the person carrying out the act and no time limit for enforcement for any subsequent owner).

I have real doubts about the validity of any indemnity insurance for the latter.

 

[Flyfisher]

2. Responsibility for correcting the work (if indeed it can be) is - or becomes- the responsibility of the owner, rather than the perpetrator. Legal liability (i.e. for the criminal act) and prosecution for the offence remain with the perpetrator.

And, presumably, the perpetrator would be ordered to pay for the reparation work. Of course, the case would have to be proved (the perp might claim it was done by the previous owner?) and even if proved they would have to be able to afford to pay the costs. Unfortunately, getting a judgement in your favour is one thing, actually getting paid the monies awarded to you is another.

So, it seems to me that, although you have the responsibility for the reparation works, it is not a given that you would have to pay for it yourself. Therefore, the 'indemnity insurance' is not after the event - it is insurance in case you may not be able to recover the costs from the original perpetrator.

I'm not a lawyer, but insurance companies are full of them and I'm sure they know what policies they can and cannot legally sell. If such policies are available why not just ask for the policy schedule and check the exact terms?

 

[skier-hughes]

As insurance is a payment taken for risk, surely the risk is if they are told to put it back to how it was or not.

Not when they will be told to do it?

Granted if it was done without consent they should be told, but why hasn't it been done already?

 

[Nemesis]

It might be that the local authority is now alerted..

However:

My solicitor has advised that if it turns out that no listed building consent was obtained for the windows, I will need to take out indemnity insurance, which can prove to be expensive.

This all depends really; are the replacements (unfortunate that simple repair wasn't done) exact copies of the originals?

 

[Penners]

You can't protect yourself after the event

This insurance is not protection against the installation of the windows (ie: "the event"). It's protection against the possible cost of being required to reinstate the original windows. So it's not actually after the event at all.

Kai1 - this type of indemnity is not uncommon, and - as Juju has observed above - the normal practice is that the vendor pays the premium, not the purchaser. If you discuss it further with your solicitor, you'll probably find that this was what he/she was going to try for.

 

[NT]

Insurance is only valid if you disclose all material facts. I cant see any insurance co giving you insurance for 200 in your situation. Its just not gonna work.

If you buy, youre liable, thats it.

Theres no reason why the seller should reduce the price, the goods for sale are the same as they were when priced. You could try for it, but dont get too hopeful.


NT

 

[stickybeak]

Yes, the 'risk' - i.e. the loss- is the expense associated with having to
a/ put the works right, or
b/apply for LBC for the works that were done, in the hope that they might be allowed (so-called 'retrospective consent' which is apparently nothing of the sort).
If, as our correspondent seems to be saying, her estate agent already knows that there have been unauthorised works, the 'risk' is pretty high, and this information would have to be revealed to the insurer, or risk invalidating any insurance cover. In the light of that knowledge, which insurance company would accept the risk except at the sort of premium which menans you'd be better off doing the work anyway?

 

[Nemesis]

The one thing to ascertain however is - is what has been done something which needs to be undone?

It may be that the windows have been replced with like for like replacements. While far better to have retained the originals and repaired (including glass) in such a case I cannot see that the local authority would take any action at all.

 

[stickybeak]

I suppose that there is a chance that our 'perp' did in fact simply replace like-for-like in which case no LBC needed to be applied for, which may explain why he didn't apply.... but I don't think kai1 thinks that that is the case.
Have you a pic of the offending (we assume) articles? Are they uPVC?

 

[Nemesis]

My view of all of this is coloured by the experience of a friend who moved two weeks' ago from a Grade II into an unlisted but historic building.

The fuss made by both lots of solicitors (issues raised by surveys in some instances which were barmy) over details which they then demanded indemnity insurance for was incredible.

My friend has a relative who is a conveyancing solicitor and over a glass of wine or three she freely admitted there was a great deal of this indemnity insurance which if studied closely was not useful, not worth the paper it was printed on, but was a money making exercise.

 

[NT]

I can just imagine a retrospective app for the replacement of the windows with upvc, stating that apparently this bldg was one of the very first to have pvc windows back when it was built, and that this unusual feature absolutely must be preserved!


NT