Are you buying a property that comes with an extension that was built without planning permission? If so, you may face prosecution by the local authority after buying. In events like these, you may want to consider building indemnity insurance.

What is building indemnity insurance?

A building indemnity insurance policy is there to offer protection to buyers when you cannot resolve an issue in the legal titles. With an indemnity insurance policy, you will be indemnified by the insurer against any specified costs or losses that you may face in the future.

Do I need indemnity insurance?

It is important to note that an indemnity insurance policy is not always the best way to deal with issues with the property or defects in title. Legally speaking, you should always try to resolve the problem before you take matters further. In some cases, however, it can be quite expensive to resolve defects in title. What’s more, it can be quite time-consuming.

If you find that the defect is to difficult to fix, this is where indemnity insurance comes in. If you need advice on whether you should get a building indemnity insurance policy, we recommend speaking with your conveyancer for more information.

Paying for indemnity insurance

If the policy is required, the responsibility of payment will usually fall into the hands of the seller. In some cases, the seller may refuse. In the event if the seller refusing, you may need to negotiate with them to split the costs 50/50.

Mortgage lender approval

If you hide any potential defects or issues that affect the value of your property from your mortgage lender, you are committing mortgage fraud. Before your conveyancer can go ahead with the payment transaction, they will seek approval from the lender.

Final note

Each indemnity insurance policy will often come with the condition that the policy’s existence is not indulged to a third party. This information should be kept confidential between the buyer, seller, conveyancers and mortgage lenders.

Make indemnity insurance easier with Betesh

Building indemnity insurance is another complicated layer that can be added to your conveyancing list. It may seem overwhelming, but this is why having a trustworthy, reputable conveyancer by your side will make things easier. Get in touch with Betesh Middleton Law to see how we can help make the buying process easier.