Should I be satisfied with an indemnity?

[witheringrowan]

I'm in the process of trying to buy a flat, and there is just one issue that needs resolving.

The flat is in a small purpose built block from the 1970s, and the freeholder is still the local council. When the current owners bought the flat, they did some renovation work that included removing part of the wall (mixture of wall and glass panel) and the door to the kitchen. It wasn't a load bearing wall, and structurally everything is fine, but my surveyor has still flagged that I should get confirmation from the freeholder that they had approved the works. I think the particular concern is around fire safety as there is only one door between the kitchen and bedrooms, not two.

When I first raised this, the vendors said because it didn't require full building regs they didn't have to check with the freeholder, and anyway they think the same work has been done in all the flats. I said I still just wanted confirmation from the freeholder that it's all good, which surely should be easier to get if the same thing has been done in every flat. Now the vendors have come back offering to purchase an indemnity policy for the work; I've no idea if they've tried to get anything from the freeholder. Should I keep pushing or just accept the indemnity? Are these policies really worth anything? My main worry is that this could cause problems when I come to sell in 5 years or so.

I wouldn't proceed without checking things with the freeholder. What does your solicitor say (it should be their job to advise on these legal issues)? Very unlikely the vendor didn't need to check with the freeholder. Suspect the lease will have a term saying no alterations without consent of the freeholder/landlord. I would have imagined most mortgage companies would want the issue sorting out as well before proceeding if the surveyor has picked it up.

They can’t approach the freeholder and then get an indemnity policy if the freeholder refuses consent. This is because most indemnity policies will include a condition that prohibits alerting the freeholder of the potential issue.

There are two separate things to consider.

1. Does the lease require the freeholder’s consent before carrying out structural alterations? If it does and the seller’s did not obtain consent that would be a breach of the lease. If the lease is on standard long lease terms, the freeholder will have a right to forfeit the lease as a result of the breach. If this is the case, I would not be willing to rely on an indemnity policy as there is a risk that the freeholder could take the lease back in the future as a result of the breach.
2. Did the works require building regs sign off? Make sure either your surveyor or solicitor obtain an answer to this question for you. If the works required building regs sign off and it was not obtained then you will have this same issue when you try to sell the flat in the future.

Must go straight to the council to get their view. You could go to the Home Ownership team they should be able to check.

Thanks all. I'm sure it doesn't need building regs sign off.

There is a clear clause in the lease that the lessees "will not make any structural alterations or additions or remove any of the landlords fixtures and fittings". I think my vendors are arguing that this isn't a structural change. But I'm going to tell my solicitor tomorrow that the answer/policy proposed isn't sufficient and they need to demonstrate that everything is fine with the freeholder for me to be happy to proceed.