This is a little-known but potentially expensive eccentricity, dating back many centuries. In this case, your indemnity policy will cover the cost for these repairs. Right of easement will give you the right to use the land on your property. It will cover you in the unlikely event of the gifted deposit owner going bankrupt.
The house buying and selling process can be stressful enough without the thought of legal issues and heavy fines appearing later down the line. The time between exchange of contracts and completion day can be daunting, with the chance of being gazumped by another buyer still possible. Many buyers and sellers take out the insurance to help speed up that time without having to delay the process by searching for missing documents or solving issues with planning permission.
Talk to your solicitor or conveyancer about indemnity insurance as they will be the one to provide you with a quote for your policy. Who pays for indemnity insurance will depend on your circumstances and is usually up for negotiation. As the insurance policy will benefit the buyer because they will be the new owner of the property, some argue that the buyer should pay for indemnity insurance and add it to their total cost of buying a house. In these cases, indemnity insurance is more appropriate than the seller trying to retrospectively satisfy planning conditions for a loft conversion or extension.
Indemnity insurance is no guarantee of the quality of the work. Restrictive covenants are provisions written in the deeds of a property that limit its use in some way — for example not to erect outbuildings. If the breach has been in existence for some time, indemnity insurance can allow a house sale to go through. There may be conditions to the insurance, such as no current disputes ongoing, or the breach being committed a certain time ago.
Indemnity insurance for an absence of easement will cover the cost of establishing easement, or the loss of value if access ever becomes an issue. Sometimes, where a gifted deposit is required, a conveyancer will ask for indemnity insurance. All indemnity policies contain a clause that the insurance will be invalidated if the existence of the problem is revealed to third parties. In practice, this usually makes it impossible to remedy the reason for taking the insurance without invalidating it.
For example, if you had indemnity insurance for an extension built without planning permission and then sought to obtain retrospective planning permission you would invalidate the insurance. Even if planning permission was denied. If, in the above case, you planned to carry out work to the property in future, you could invalidate the indemnity policy by inviting the planning department to inspect the new work.
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If somebody has put money into your property to help you with the deposit, you might want indemnity insurance. If that contributor is later declared bankrupt, their creditors could try to make a claim on your property. Having an indemnity policy would protect you. There are other reasons why you might want an indemnity policy, but these are common examples. If you have planning permission indemnity insurance it would pay out for the associated costs.
Doing so could invalidate your indemnity insurance. In that case, building indemnity insurance could be worth having. It could cover the associated costs if any issues arose from this. However, it would also be a good idea to get a survey done to make sure the property is safe. A building regulations certificate provides reassurance that the right processes have been followed.
As with all insurance, this will depend on a variety of factors. To give you a quote, insurers will look at what you want the indemnity policy to cover, combined with the value of your property. But in many instances, you can negotiate with the seller and ask them to pay for it for you. Alternatively, you can split the cost.
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