Indemnity Policies – What Are They and When Will You Need Them?

When you come to sell your home, you may be asked to produce what seems like reams of paperwork relating to various aspects of the property. Due to the principle of “caveat emptor” or “buyer beware” it is in the interests of your buyer to request as much relevant information and paperwork prior to exchange of contracts. But what happens when you can’t produce a document? Perhaps you misplaced it, or even threw it away not realising how important it would be at a later date. That is when “indemnity policies” may come into play.

In short, an indemnity policy is a form of insurance which is used to protect the buyer in various circumstances. For example, if there is a missing Conveyance of the land (e.g. it hasn’t been registered at the Land Registry and you do not hold a copy), your buyer’s solicitors will usually request an indemnity. This is because conveyances often contain “schedules of restrictive covenants” (a list of prohibitions such as “not to erect a satellite dish at the front of the property” or “not to pave over the grassed area to the front of the property”). Restrictive covenants “run with the land” meaning that they pass to new purchasers. If you cannot provide a copy of the conveyance to the buyers, they will not be able to ascertain whether there have been any breaches of restrictive covenants which they may later be held responsible for. It is therefore often sensible to be indemnified against any future liability. Another example of where an indemnity may be required is where you cannot produce evidence of planning permission or a Building Regulations compliance certificate for an extension carried out at the property.

It is usual in the conveyancing process for the buyer’s solicitors to request missing documentation as part of their pre-contract enquiries. At this stage, it will become apparent whether an indemnity may be required. If you are unable to produce a document, the buyer’s solicitors will usually request that you obtain an indemnity policy at your own cost. We, as representatives in your sale, will advise whether any such policy is justified and whether you should meet the cost.

How much do they cost?

The cost of indemnity policies greatly varies upon what the protection is for and the price of the property. At Paul Robinson Solicitors, we always provide you with a copy of the draft and details of the cost to check that you are agreeable to the same. We also detail this amount on our completion statements which provide a full break down of costs and disbursements incurred, so you are never left in the dark with unexpected funds to pay.

So, which documents should you keep as a homeowner? Well, if you get a new boiler installed, it is always a good idea to keep a copy of the Gas Safe installation certificate. If you then get it serviced, keep a copy of all paperwork provided. Similarly, if you get replacement windows or doors installed, ensure you keep a copy of the FENSA certificate. If you have any planning permissions, it is always a good idea to keep hold of correspondence from the Council, especially if it has a reference on. Planning and building control documents can often be obtained from the Council’s website at a later date, but there are no certainties so it is always best to hold copies. If you are selling any white goods or electricals as part of the sale, the buyer will want to know if you have any manufacturers’ warranties. Similarly, if you have had any damp-proofing or cavity wall insulation, they will want to see a copy of the guarantee for the works. If you bought a new-build home, you would have been provided with a ten-year new build warranty, usually undertaken by NHBC, BLP or a similar company. It is always a good idea to keep these documents in safe place, also.

When should you provide us, as your solicitors, with these documents? In the interests of time, we would advise you provide all relevant documentation when you return your Fittings and Contents Form, Property Information Form and Leasehold Information Form (where applicable). This way, we can send copy documentation to the buyer’s solicitors as part of our draft contract package. This avoids the need for them to raise enquiries in this regard and therefore speeds up the transaction. However, if you need a little more time to collate documentation, we require documents prior to exchange of contracts at the latest. This is because the buyer will require sight of the same prior to binding themselves with a contract.

If you have any questions or queries in relation to indemnity policies or the sale process generally, please do not hesitate to contact our substantial and highly dedicated team. All our details can be located at www.paulrobinson.co.uk.