Indemnity policy - who pays, buyer or seller?

[ProjectGainsborough]

Please

If you had to indemnify against works not properly documented, did the buyer or seller pay?

The seller. Always the seller as they are the ones wanting to have the sale go through at the agreed price. A price which didn't allow for undocumented works/title issue or what ever else indemnities are generally used for.

Yes, agree it is the seller, though many people on MN don't seem to think so!

We have an issue with this holding up our sale at the moment. It's to do with a drain under our conservatory. When we built it we didn't know it's a long way under the foundation no manhole covers or anything. Water board won't confirm anything so we told our solicitor a month ago we'd just pay the indemnity anyway it's only 120 pounds but we think it would potentially be an annual fee and the buyers would pay it after the first year and I think they must still be trying to decide if they want to or not.

We paid for two indemnity policies when selling my late father's house, as there were a couple of issues which we didn't know about. The policies cost around £100 each, and were once-only payments - at least, the sale was more than a year ago and we haven't been asked for another premium!

I don't think there's any rule that says the seller must be the one to pay - if they think the buyer is desperate to get the house they might take the chances losing the sale.

In our case, we paid because we didn't want to lose the sale - I was a bit pissed off though, because the price we asked did allow for the fact that it was a probate sale, that the property needed a lot of refurbishing and that there might well be unresolved issues. There were four of us selling, and I think if it had just been my sister she would have said no, the buyer could pay if they wanted.

Ours is in top notch condition. Our buyers are already paying under the asking price by a lot and getting 1k cashback and we don't even know if we need the indemnity anyway we just said yes as we don't think 100 pounds ish to speed things up is a great deal in the grand scheme of things. If we could afford to hold out for more and I could be bothered to argue then I think I might on principal.

It's not a rule or anything like that. The seller marketed their property and the potential buyer made the offer on the basis that there were no other issues ie drains/undocumented works etc therefor the seller ought to pay for any indemnity.

Irrespective of whether the property is in top notch condition and the agreed price is under asking (an asking price is just that not a formal valuation), the agreed price was done without the indemnity issue being brought to the buyers attention.

Mostly the buyers are not the ones demanding that there be an indemnity policy but their lending banks are.

Often sellers fail to appreciate that their property would not be mortgageable without the indemnity policy.

Thus seller ought to pay if they want to sell their property at the agreed price and not reduce it to be a cash buy only without an indemnity.

It comes down to negotiation. A buyer will say a seller should have the proper documentation so if they don't, they should pay for an indemnity. A seller will argue (probably) that the issue has never been a problem for them so if the buyer wants it, the buyer pays for it.

Seller

I love the fact that you can ask a technical question on MN at 6.47 and get responses straight away! Thanks all. We gave the sellers quite a lot of money to cover potential expenses, so I am loathe to chuck more at it, TBH.

Agree with Mandy. It's a matter of relative bargaining power. We paid the indemnity cover on our purchase as the seller flatly refused but had been very reasonable about everything else and it was the only point delaying exchange.

Our seller left the house immaculate with loft completely cleared, fridge empty and spotless, all picture hooks taken down and hole made good, bottle of wine on the table etc and I wonder if they'd have made such an effort if we'd been ar5eholes about a £100 indemnity policy.

In a competitive London market we bought our insurance as the buyer, if things were less heated we'd have pushed for the seller to pay. Was only about £1k which was a drop in the ocean at the time. We had already hard balled enormously over the roof and other bits so were def not in no bargaining position anymore.

We got our buyers to pay. It comes down to negotiation although sellers tend to pay.

Well our buyers certainly won't be getting any wine!