New Build Solicitor and Indemnity insurance

[Liz112]

Hey all,
so following up on my earlier thread where we were told to use our own solicitor than the Builders Recommended builder.

Initially they tried to convince that use theirs as all searches etc are done and best to use theirs.
Also offering full incentive on using their solicitor.
We have told them that we want to use our own solicitor and they have now agreed.
But they want to complete the sale quickly and suggesting that searches will not come through in less than 4 weeks or so.
And we will offer indemnity insurance for the same. I have been trying to research about new builds and indemnity but not really able to find anything.
Can anyone advice on this please?

Your Solicitor will be able to.

If buying with a mortgage, your lender will usually insist on searches being done...indemnity insurance is usually only acceptable when remortgaging.

Why are they pushing for the sale before the searches come back?

@Knownbyanothername

Why are they pushing for the sale before the searches come back?

It is a new build and want to sell it before Xmas :)

Can you wait til after? You’re the buyer so you’d really want to have everything in order before signing on the dotted line.

@Knownbyanothername

Why are they pushing for the sale before the searches come back?

as we are not going with their solicitor and we will not be doing the searching but using this insurance

I'm confused about what you are indemnifying...

You are indemnifying the other side for your searches not coming back?

The searches come from the local authority. The timescales are dictated by them, and you need the results in order to know if the property/land you are buying is good title.

Usually you would buy indemnity for specific elements- ie chancel repair liability, indemnity against an element of the title (if there was a covenant or easement on the tile that could be tricky for example).

You said the searches were already done?? Why can't your solicitor buy them off the builders solicitor?

Always use your own solicitor.
Wait for the results of all searches and checks.
They should provide any indemnity insurance if any issues are identified. This is open to discussion but any issue identified will remain who ever buys the house and will slow any sale.
Do not be rushed into anything. They may wish the funds to fund the next stage of any project but this is not your problem. Ensure all questions go via them and not directly to the sellers.
There is no rush and if you withdraw they will have to start from scratch anyway.

This is getting more complicated. I thought new builds were easy to buy
my own solicitor is saying - ?

Our advice in regard to proceeding to completion without having the searches is that we
would strongly advise you to obtain all searches as normal, but in particular the local searches
at the very least. This is as the local search provides important information for you regarding
the property which could later adversely affect you; namely any payment lodged against the
property which you will inherit, any planning enforcements to be taken due to lack of
planning permission/building regulations, works to be done in the local area such as
motorways and building properties which can affect your enjoyment, local roads and footpath
being at the expense of the council or personally yours etc. Whilst the above they may be
highly unlikely, it is always prudent to have formal confirmation. With new builds, this is less
important, but the main points for new builds would be to ensure no liability under any s106
planning agreement and Community infrastructure levy (but the developers agent should
provide information to this in the paperwork or we would raise enquiries to this)
The other pertinent search is an environmental search, which amongst other things, confirms
whether the property has passed or not in terms of contamination.
However, should you wish to waive the searches being completed please
sign the below declaration and date this accordingly. You can proceed without the
searches, but we would need a search indemnity policy if you are purchasing with the
aid of a mortgage; which is a one-off cost of around £80-£120 dependent on the
purchase price. Please confirm if this is agreeable and I will obtain a quote.
This will cover you up to the purchase price if any issues arise which would otherwise be
flagged up in the local searches as stated in the aforesaid paragraph

Is your mortgage company happy to have no searches completed?

@Peas252

Is your mortgage company happy to have no searches completed?

Thanks Peas252 for responding

as such they might be happy - lot of properties being sold with indemnities rather than searches - but that has been only for Old properties.
Not able to find anything in terms of New Build and Indemnity :(

There’s no specific question for search insurance on new builds in the Lender’s Handbook.

Presumably your conveyancer has checked this anyway and advised you accordingly?

I think you need to speak to your solicitor to ensure you understand the risks. Say your purchase price is £200k but environmental searches would disclose some contamination that would cost to £250k to remedy - then you’d have a rather large problem because the limit of the indemnity is £200k and meantime your property is unsellable.

I would take your solicitors advice and wait for the searches.

Please do not allow the builders to bully you into cutting corners! They want the figures in their year end accounts so of course they will swear black is white to get your house completed by then. The searches are really important - my OH shocking solicitors didn't do their job properly when he bought the NB he's now selling and warn him about estate maintenance charges which have kicked in after two years.

Wait for the searches. There may be evidence of a history of mining, underground streams, and culverts, etc that you need to follow up on before committing yourself. Then question your solicitor about anything it throws up. Contaminated land can simply mean it is close to a garage.

The indemnity policies are typically limited in what they cover and in what circumstances they would pay out. Yes, they are there in theory to protect the mortgage company but you also need to be protected. The searches include, as outlined by your solicitor, evidence that the development has complied with all of the planning requirements and that rights have been correctly assigned. It is likely that the indemnity would cover the costs should the council seek to enforce compliance, but not the legal costs to retrospectively rectify any issues should some failure of the building company cause problems down the line.

They are the 'big man' here.. you will be left with the headaches, the costs and potentially a house that is difficult to sell, if they have not complied with all the requirements or are seeking to cut corners in order to get things completed. When their business focus has moved on to the next project, resolving anything on already solved properties will fall to the bottom of the priority list.

It is not in your interest to proceed without searches. In order to fully understand the risks associated with this, you would need to understand the purpose of all of the searches, the implications of the potential things that could be revealed by these and other queries raised by your solicitors when they review the documentation and then review the terms of the indemnity policy. This is the expertise that you pay your solicitor for and they have given their professional advise and set out quite clearly that they will not be liable for any issue that arise as a result of your failure to accept their advice.

There are circumstances where an indemnity carries little risk.. for example we had a covenant on our house created in 1901 granting terms unknown to persons unknown. As it was unlikely that these persons were still alive and no further evidence of the covenants could be found, it seemed unlikely that anyone would be able to enforce these rights. Also, alterations that are done more than 2 years ago, the council is unlikely to enforce any changes, however the indemnity does not protect the buyer from the costs required to put right any works that were not done in accordance with the building regulations in force at the time.