Conveyancing FAQs

What are indemnity policies used for ?

Indemnity insurance is used to protect you against possible legal risks associated with a policy.  If there is a problem with the legal title, it can take quite a while to resolve. Indemnity insurance ensures the transaction is not stalled indefinitely by time-consuming legal work and the purchaser will be indemnified where any risks materialise.   Possible problems include historical rights of way and other obscure rights attached to the property where it is difficult to determine who benefits from that right.

Who pays for indemnity policies ?

Indemnities policies are obviously designed to protect the owner of the property.  The seller will usually pay for the premium, which is a single premium.  The cost of the insurance is determined by the size of the risk and value of the property.

What is the position of mortgage lenders with regards to indemnity policies ?

Mortgage lenders usually have to agree to a policy.  Depending on the size of the risk, the lender may require that any issues are resolved if possible, although given their frequency of use, lenders often accept indemnity policies.

What searches should I carry out ?

If you are buying the property with a mortgage, the lender will usually ask for certain searches to be carried out so they can accurately determine the amount of risk inherent in the property.  As a minimum, local and drainage and sewage searches will be carried out (to find out about planning permissions/planned developments attached to the property and drainage and sewage systems respectively.  If the property is a mining/ex-mining area, the property could be at risk of subsidence, so it is a good idea that a mining search is carried out if applicable.

I don’t have the money to pay for a 10% deposit.  Is that a problem ?

Whilst it is entirely up to the seller, it is not uncommon for deposits less than 10% to be accepted, although you can expect to provide an explanation as to why you cannot front the full 10%.  If you are selling and purchasing another property, it is possible that the purchaser on your own property could pay the deposit on the property you intend to purchase, although you will, of course, have to make sure this is OK.

 

Is it absolutely necessary for me to take out buildings insurance ?

Whilst it is not absolutely essential, if you are purchasing the property through a lender, the lender will require you do take it out, and you can choose to do it yourself or have the lender take it out on your behalf.   To calculate the cost of rebuilding the property if it is destroyed, a survey will have to be carried out.  Bear in mind that it is also possible to use any existing cover you have, although of course the premium paid will have to be adjusted according to valuations in the survey.

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