What is an indemnity policy?
An indemnity policy is a protective insurance policy taken out during the transaction if there is anything missing or a defect within the property or property title and protects you from any third party claims.
There are various defects and missing documents which may come up on a property while examining the title deeds, searches and any other documents relating to the property and your solicitor will advise you on what they find and whether they will request an indemnity from the sellers conveyancer or if you are selling you may be asked to pay and provide an indemnity policy to the buyers.
Indemnity policies are a one-off payment and will be paid for on completion. Normally they have no limitation period and can be passed onto any successive buyer.
Reasons why you might need indemnity insurance
There are various matters which your conveyancer would request an indemnity policy for however the main ones which occur more regularly are the following;
- Missing paperwork for building or repair works
This is one of the most common reasons for an indemnity policy to be taken out and is to cover building works with missing documents.
This could be to cover for missing building control completion certificates or work which does not have planning permission. Building regulation completion certificates are issued by building control surveyors to demonstrate work has been carried out to a safe standard, an example would be a FENSA certificate.
- You are missing a deed relating to the property
If there are any deeds mentioned in your title register which you do not have and land registry do to have a copy for this will require an indemnity policy to cover for any missing information which would be included in the document.
If there are any deeds mentioned in your title register which you are not in possession of and land registry do have these, you will be required to take an indemnity policy which will cover any missing information.
- Issues with a lease
When buying or selling a leasehold property, the lease may be missing certain clauses or information which is important or needed as part of lenders requirements.
In Summary
Indemnity policies can be used and are useful for any legal defect a property may have.
They can protect property owners from legal challenges from a third party, whether this is the local authority or a covenant holder.
For some issues such as problems with a title deeds or missing planning permissions an indemnity policy can be the quickest and sometimes the only solution to rectify the issue. It should be noted that indemnities policies are a mechanism to work around a defect and provide a level of protection but do not rectify the issue itself.
If you have any other questions relating to Indemnity policies, please contact Attwells.
Our blogs and articles are correct at the time of writing.
These have been created for marketing purposes only and should not be considered as legal advice.
