Indemnity policy

[onedream]

We are 5 months into selling our house and buying another one. Our house is bought by a person who will not live here but will let it out. The buyer now came with request of us paying for half or the annual cost of indemnity policy. I did read about it and this policy is linked to property rather then person, has anyone experienced anything like this when selling? It makes no sense to pay for 6 months policy if we realistically will be here for few more weeks..
I haven't heard of this policy before. Should we refuse to pay this?

What's the indemnity policy for?

They are insurance policies against something specific - for example, against windows not having valid paperwork. The policy means that, if an issue is raised by the local authority, the buyer isn't out of pocket. They can be quite common and cheap, but they vary massively.

If one is required, it'd be you that paid for it, under advice from your solicitor. The buyer couldn't take out the indemnity policy, I don't believe.

What does the buyer want an indemnity policy on?

Surely it depends what it’s for and how much etc? We have one for the lifetime of our house. It cost £20 !

The buyer wants us to pay £52.26, half for indemnity policy. I'm not sure now if this is annual or for life. She did not specified what will this cover but the general understanding of this policy I googled is to cover any problems showing out later like for example if paperwork wasn't done properly when extending etc. In 3 years we have been here we haven't done any building work, no extensions, no changing windows, nothing major where you need any paperwork. No issues came out from searches.
As it's valid on property and we will be moving out should she not pay for this as she will be the owner potentially claiming in future?
Or is my understanding of this policy not right? The solicitor said it's not for us to pay but now came back to us as buyer insisting we need to cover 50% of the policy cost..

@Seasonschange
But we will be moving out so should we still pay for life long policy on this house?

@TakeYourFinalPosition
Can I ask why would it be up to us to activate this policy if we are leaving and will not be potentially claiming in future?

@onedream The indemnity policy indemnifies your buyer against something you've not done, or paperwork that you haven't got. Your buyer can't take it out for herself, because you can't insure yourself against something that you didn't do.

It won't be a lifetime policy, and it won't be general. It'll be a specific policy against something you haven't got paperwork for. If you haven't done any work on the house, it could be that you haven't maintained something, or it could be that your missing paperwork from when you bought.

Your solicitor should be able to advise on what exactly the policy is for, and whether you should cover it.

@TakeYourFinalPosition thanks, solicitors advising not to pay as there are not issues or reasons for this policy but I spoke with my husband and although I don't think it's nice coming with this after 5 months in, if this was to be deal breaker we just pay what else can we do..I don't feel is fair and as you mentioned she can't buy policy to cover herself from something she hasn't done it is a bit similar for us as we should not be buying policy for something we haven't done correctly as nothing like this exists..it's a 1950's semi no building work or anything else done by us or previously, nothing came out from searches when we bought this house or from searches now when we selling..

Has the solicitor told you what the policy is for? If not, I'd go back and ask that - so you can at least narrow down what's happening.

One policy only protects against the specific thing that you're insuring against.

I'm buying right now, and our seller has offered two indemnity policies - one because the drainage search hasn't come back, and one because he doesn't have the paperwork for the windows. Both are separate policies, they've cost him less than £100 each, and they only protect against that specific named issue.

For us, both are fine - we're not too bothered about them, but our mortgage provider won't proceed without them.

I'd go back and ask exactly what the policy is for, and that might help you to decide whether this is something that is a reasonable ask

@TakeYourFinalPosition thank you, I will speak with solicitors and hopefully find out what's her reasoning behind it, thank you 😊

Normally the seller pays for the indemnity policy, but as pp said it has to be for something specific.
I had to buy one for my house as I didn't have the document for the new windows. It's not going to be worth anything - council isn't going to rock up and make them change them. But it was what the solicitor (maybe mortgage company) wanted.
I think there's a good sideline in indemnity policies that aren't needed, justified or of any value.

[quote onedream]@Seasonschange
But we will be moving out so should we still pay for life long policy on this house? [/quote]
I don’t think it matters who pays it’s just who’s willing? Without us asking our solicitor asked the seller to pay for it. I was actually annoyed because it was the only thing holding up exchange and it was 20 bloody quid! So I don’t really think about what was fair. I think you would be equally silly to quibble over £50. If it’s required just pay it.

@Seasonschange
It looks like this is now holding out exchange too, as our solicitors already replied few times to buyers solicitors this policy is not needed but they insist we pay half. I am just trying to understand what's the issue with this house they think will go wrong as nothing came out from surveys and we have provided all paperwork we were asked to provide. No building work has been done. Of course we will pay if the sale will stand on this I'm just trying to understand what I am paying for. Today is this, tomorrow they might come up with something else. I am just trying to justify this extra expenditures as we don't have money to waste even if it's just £50.

@maofteens thank you, I will try to find out what specific issue they want to cover..we are not aware of anything not covered with paperwork or anything else in general..I don't think it's got to do anything with the mortgage provider all offers are in place for months now looks like this is what's holding everything up at the moment..

Your solicitor must know what the supposed issue is, if they've managed to reply to say an indemnity policy is not necessary?

We have only just learned about this now, they (our solicitors) didn't mention what's the issue they just said today that they kept refusing this request from buyers solicitors now for a while as it has no valid reasoning but they (buyers solicitors) keep coming back asking for half to be paid by us - sellers. So today they emailed asking if we are willing to pay or if we want them to keep refusing. I will now ask them what is the 'issue' the buyer wants to cover as we - sellers - don't have any idea or knew about conversations between solicitors prior to now.

Nobody on here can tell you what the indeminty policy is meant to cover. This is what you're paying your solicitor for. Ask them to explain it to you.

They are for something specific, it’s weird they haven’t told you what. Your solicitor should also know they need that info, it’s like the next question.. surprised they told you about it without all the info.

We had one when buying our house because the seller said they owned the side access but they actually didn’t when searches and what not came about so we have the value we paid for the house if it were to be blocked for any reason (not by us). It’s life long.

@FTEngineerM
Thank you, I will get in touch and ask, they must know if they kept refusing on our behalf, I am getting a bit upset about it now especially about the fact they didn't explain this policy to us properly and how it works and also that they didn't say what's the issue. 5 months in with no exchange date I'm starting to wonder how much of this time is taken by this policy dispute..