Afraid house of dreams purchase is abou tto go t*ts up - anyone know about covenent consent?

[monkeytrousers]

The current sellers were bought the house with a bathroom extension which did have planning permission but did not have covenant consent from the coal authority, who previously owned the land - their solicitor didn't tell them this. Now they are trying to sell to us, our solicitors are telling us t's a massive problem but their solicitors are telling them that it's not a big problem at all. We are very confused and this has now been going on for 6 month with no chain.

We received this letter yesterday :

...your mortgage lander is happy to proceed on the basis that the seller provide indemnity insurance for the lack of building approval. We have written to your lender today and advised that this is not ideal because it will offer no comfort if you are required to make a claim for subsidence against the coal authority...the CA will not uphold the claim....

Has anyone had experience of this and gotten through it?

[LIZS]

I think Indemnity Insurance would protect you against any claim from the Coal Authority for the extension but perhaps not in reverse. Their solicitor should have picked it up when they bought the hosue (a cursory check of the Land Registry documents would have highlighted it) but apparently (I had a thread about covenants and pp a few days back) you can get Planning Permission regardless of any existing covenants so the issue may well not have come up at the time of building. I guess it may depend how likely a risk subsidence is and if you would otherwise have insurance to cover it.

[monkeytrousers]

Big worry is if we will be able to sell should we have to in future..

[ladymuck]

An indemnity insurance will protect you should the coal authority try to bring an action for breach of covenant. Any subsequent purchasers can get the same.

But on the specific issue of subsidence, isn't this something you would need to raise with your insurer (rather than mortgage lender)? Usually in the event of subsidence you woudl claim on your buildings insurance?

[LIZS]

In that case you want it watertight and surely it is up to the vendors' solicitor to rectify the problem, even if it means contacting the Coal Authority and getting them to agree the covenant issue retrospectively, if that is possible. If you pull out it will just resurface with their next purchasher.

Mine is not a Legal point of view by the way.

[LIZS]

Thinking about this earlier not sure why having breached the covenant for the extension should necessarily affect a subsidence claim unless it could be proved that it was related to the building the extension. Would you have been able to make any claim against them in the event prior to it having been built anyway ?

[ladymuck]

DO NOT CONTACT THE COAL AUTHORITY! At least not unless you are prepared to back out of the sale. Once you contact the Coal Authority you will not be able to take out the indemnity insurance.

[Expectantmum]

MT I have just bought a house and we needed indemnity insurance because there was a covenant in the deeds stating that we needed the original builders permission to alter but considering the house was built in 1890 and the original builder has long snuffed it, the covenant cannot be removed, thus the reason for the insurance. It cost about 180 quid and we went 50:50 with the Sellers. HTH

[notanotter]

we have done an indemnity for a similar matter = turned what seemed an insurmountable problem to nothing overnight!!

[monkeytrousers]

Our solicitors already contacted the coal authority and they said consent couldn't be gained retrospectively.

For all of you who have gone ahead with indemnities, are you not afraid you'll have to go through it all again if you decide to sell and that it might frighten buyers off?

[LIZS]

Can't you transfer the policy in the event of a sale ? We have details of one between the builders fo our house (25 yrs ago) and the previous landwoner.

[monkeytrousers]

Just found \link{http://www.coal.gov.uk/news/newsmarch2002structuralprecautions.cfm\this} but I can't make head nor tail of it

[ladymuck]

MT - I'd definitely show that to your solicitor, but you may need to see whether the bathroom extension did comply with building regs. If so then you may have a way out where you can get the retrospective consent.

[katiebl]

We had a similar problem when we bought our house. The solicitor made it a condition of sale for the sellers to get indemnity insurance for it. 3/4 years later and we haven't had any problems (though extension is about 15 years old). One thing we were told by solicitor (though don't know if it applies to you) is that in 2007 houses that were built on land that isn't owned by the house owner, this will be ended and the land will be passed over to the landowner. Apparently this only exists in a couple of cities (Bristol being one).

DOn't know if this will be any help as find the whole subject slightly confusing, but thought I would share it.

[monkeytrousers]

Gonna send the link to the solicitors. I'll keep posting till this is resolved just so there is a thread in case someone else goes through this. Thanks all for your advice.

[LadySherlockofLGJ]

I thought for one awful minute, you were doing a MN link, just imagine how strange it would be if you solly olly knew your posting name.

[LIZS]

Rather ambiguous ! Good luck.

[monkeytrousers]

Eh, MGR? Wot you on about?

[LadySherlockofLGJ]

When you said you were going to send the link to your solicitor, I thought you meant the whole thread.

[monkeytrousers]

Oh, yes..what a terrible thought