"Restrictive covenant" Indemnity insurance?
Discussion
Guys, I got a rear extension going through Planning at the mo but we've got a "Restrictive Covenant" on our property that basically states that anything to be built on the rear needs to go through/get permission from the original vendor (House was build in 1991).
Now we've only recently bought the property and it's got a small 3x3 conservatory on the rear that the previous owners never got permission from the vendor from. Our solicitor made us aware of this but we're not to bothered as I'm sure the original vendor would have been in touch many years ago if they knew. It's coming down anyway to make way for our extension.
Now I've done a Google on the original vendor and it turns out they are still an active property consultant with an office approx 20mins from our house.(Gulp!)
My question is - do I chance it, built extension and then get Indemnity Insurance 12 months down the line (this seems to be the norm from what I can gather as the Insurance Co will only insure in 12months after it been built). Or are there any other options, if I take Insurance now I think that will only cover me for the current conservatory which will be coming down soon anyway!!
Once again any advice apprieciated..
Now we've only recently bought the property and it's got a small 3x3 conservatory on the rear that the previous owners never got permission from the vendor from. Our solicitor made us aware of this but we're not to bothered as I'm sure the original vendor would have been in touch many years ago if they knew. It's coming down anyway to make way for our extension.
Now I've done a Google on the original vendor and it turns out they are still an active property consultant with an office approx 20mins from our house.(Gulp!)
My question is - do I chance it, built extension and then get Indemnity Insurance 12 months down the line (this seems to be the norm from what I can gather as the Insurance Co will only insure in 12months after it been built). Or are there any other options, if I take Insurance now I think that will only cover me for the current conservatory which will be coming down soon anyway!!
Once again any advice apprieciated..
We had to get this for our sale as we had a covenant in place. Didn't seem to be a big deal. Was missed on the original purchase annoyingly.
End of the day no one can offer you certainty - it's a gamble. But I would say the likelihood of problems is low. Do you have neighbours who are likely to complain and know about the covenants?
End of the day no one can offer you certainty - it's a gamble. But I would say the likelihood of problems is low. Do you have neighbours who are likely to complain and know about the covenants?
We're 4 very similar detached houses in the country, all built at the same time so I'm presuming we've all got the Covenant in place.
It's not overlooked by anyone as such (back's onto big garden & fields) so any building work on the back is really not going to get in anyones way at all. I don't think any of the other 3 houses have had anything done on the back, they look pretty much exactly like how they were built 25yrs ago.
Thing is, we're doing lots's to our house from the front as well, all new anthracite windows & doors (all 3 neighbours are still on the 90's red mahogany wood), nice new funky double garage door etc so out of the 4 it will stand out. I'm just worried the original vendor might drive past one day & put two & two together and come chasing after us for some ££££!! Hence was wondering what policies are avalible to maybe help cover it should situ arrise..
It's not overlooked by anyone as such (back's onto big garden & fields) so any building work on the back is really not going to get in anyones way at all. I don't think any of the other 3 houses have had anything done on the back, they look pretty much exactly like how they were built 25yrs ago.
Thing is, we're doing lots's to our house from the front as well, all new anthracite windows & doors (all 3 neighbours are still on the 90's red mahogany wood), nice new funky double garage door etc so out of the 4 it will stand out. I'm just worried the original vendor might drive past one day & put two & two together and come chasing after us for some ££££!! Hence was wondering what policies are avalible to maybe help cover it should situ arrise..
You can't always get insurance for covenants that recent, it depends who the beneficiary is, my guess is that it will be the original developer.
Generally we know when extensions are being built on our developments because we monitor planning applications as a matter of routine.
Plus insurance isn't a panacea (as my legal director once told me). It may cover your costs of fighting an action, it may cover your demolition costs or cost of reaching an agreement, it will not cover loss of value. The existence of a policy may put off future buyers, it does with some buyers on new build.
Typically the covenants we insure tend to be 1950's or earlier mainly because of the difficulties of insuring the more recent ones
Generally we know when extensions are being built on our developments because we monitor planning applications as a matter of routine.
Plus insurance isn't a panacea (as my legal director once told me). It may cover your costs of fighting an action, it may cover your demolition costs or cost of reaching an agreement, it will not cover loss of value. The existence of a policy may put off future buyers, it does with some buyers on new build.
Typically the covenants we insure tend to be 1950's or earlier mainly because of the difficulties of insuring the more recent ones
Daggerpie said:
We're 4 very similar detached houses in the country, all built at the same time so I'm presuming we've all got the Covenant in place.
It's not overlooked by anyone as such (back's onto big garden & fields) so any building work on the back is really not going to get in anyones way at all. I don't think any of the other 3 houses have had anything done on the back, they look pretty much exactly like how they were built 25yrs ago.
Thing is, we're doing lots's to our house from the front as well, all new anthracite windows & doors (all 3 neighbours are still on the 90's red mahogany wood), nice new funky double garage door etc so out of the 4 it will stand out. I'm just worried the original vendor might drive past one day & put two & two together and come chasing after us for some ££££!! Hence was wondering what policies are avalible to maybe help cover it should situ arrise..
I guess the true risk is actually Google Earth. It all boils down to whether the covenant holders issues them as a matter of course or whether it was done to specifically earn revenue in the future? Having said that, I can't see the latter being the act of a business genius as the legal costs of collecting any money could easily outweigh the potential income. It's not overlooked by anyone as such (back's onto big garden & fields) so any building work on the back is really not going to get in anyones way at all. I don't think any of the other 3 houses have had anything done on the back, they look pretty much exactly like how they were built 25yrs ago.
Thing is, we're doing lots's to our house from the front as well, all new anthracite windows & doors (all 3 neighbours are still on the 90's red mahogany wood), nice new funky double garage door etc so out of the 4 it will stand out. I'm just worried the original vendor might drive past one day & put two & two together and come chasing after us for some ££££!! Hence was wondering what policies are avalible to maybe help cover it should situ arrise..
Probably worth trying to establish how much an indemnity from an established underwriter would cost to cover you for building the new extension as a first step?
My guess is that you can go and buy cover from one of the monkey underwriters for peanuts as they have no intent on ever having to payout (which is what a vendor would buy) but as you are going to be living there then if you reveal the true situation to a credible underwriter you'll get a fair price and reasonable cover.
Ultimately, they can't stop the extension from being taken down if the covenant owner goes full retard.
Your other risk is that by approaching them for consent you will be dobbing your neighbours in so they won't be best pleased. If you're all in the same boat then it becomes more favourable anyway as the holder isn't going to like the odds of multiple pockets to take them on?
Edited by DonkeyApple on Wednesday 22 February 09:42
Thanks for your feedback, I emailed my solicitor who dealt with the house purchase (only bought it mid December), they have mentioned the Indemnity Insurance as follows:
"Any policy taken out now would cover the current breach (ie the conservatory) but then if additional works are then carried out this would invalidate the policy.
Alternatively it may be possible to get a bespoke policy to cover a future breach and I can make enquiries if you wish. Please note our fees for searching for and obtaining a quotation will be £100.00 plus VAT."
I think I'll wait until I get the go ahead from planning on the extension and then take it from there. Does anyone know if there is such a thing that covers a "future breach" or will it most likely be a case of having to wait until 12months (min) after extension built till I can get cover??
"Any policy taken out now would cover the current breach (ie the conservatory) but then if additional works are then carried out this would invalidate the policy.
Alternatively it may be possible to get a bespoke policy to cover a future breach and I can make enquiries if you wish. Please note our fees for searching for and obtaining a quotation will be £100.00 plus VAT."
I think I'll wait until I get the go ahead from planning on the extension and then take it from there. Does anyone know if there is such a thing that covers a "future breach" or will it most likely be a case of having to wait until 12months (min) after extension built till I can get cover??
We had similar on our house.
80% of the houses in the area have extensions, were built by the same developer in 1930 and have restrictive covenants.
Turns out the developer is still registered as a company and our solicitor suggested the indemnity, purchased by the vendor to protect us in the event the developer asks us for compensation or to knock the extension down.
As with all these things, the solicitor can't guarantee anything but her rather cop out advice we that in 25 years she has never seen an issue in the area.
I wasn't overly satisfied with her answer but then spent a while researching this and this problem is UK wide and appears to be so prevalent it's comical.
Just shows how stupid these covenants are given they were intended for developers to protect their handy work for a short time, not to eternity!
80% of the houses in the area have extensions, were built by the same developer in 1930 and have restrictive covenants.
Turns out the developer is still registered as a company and our solicitor suggested the indemnity, purchased by the vendor to protect us in the event the developer asks us for compensation or to knock the extension down.
As with all these things, the solicitor can't guarantee anything but her rather cop out advice we that in 25 years she has never seen an issue in the area.
I wasn't overly satisfied with her answer but then spent a while researching this and this problem is UK wide and appears to be so prevalent it's comical.
Just shows how stupid these covenants are given they were intended for developers to protect their handy work for a short time, not to eternity!
Daggerpie said:
Thanks for your feedback, I emailed my solicitor who dealt with the house purchase (only bought it mid December), they have mentioned the Indemnity Insurance as follows:
"Any policy taken out now would cover the current breach (ie the conservatory) but then if additional works are then carried out this would invalidate the policy.
Alternatively it may be possible to get a bespoke policy to cover a future breach and I can make enquiries if you wish. Please note our fees for searching for and obtaining a quotation will be £100.00 plus VAT."
I think I'll wait until I get the go ahead from planning on the extension and then take it from there. Does anyone know if there is such a thing that covers a "future breach" or will it most likely be a case of having to wait until 12months (min) after extension built till I can get cover??
You can usually get cover before planning, but it will be conditional on their being no comments relating to covenants from planning consultees. You usually have to provide copies of planning objection letters once you have the consent"Any policy taken out now would cover the current breach (ie the conservatory) but then if additional works are then carried out this would invalidate the policy.
Alternatively it may be possible to get a bespoke policy to cover a future breach and I can make enquiries if you wish. Please note our fees for searching for and obtaining a quotation will be £100.00 plus VAT."
I think I'll wait until I get the go ahead from planning on the extension and then take it from there. Does anyone know if there is such a thing that covers a "future breach" or will it most likely be a case of having to wait until 12months (min) after extension built till I can get cover??
we have this same restriction on our property which was made apparent during the searches etc.. at the time of purchase, a year ago. We queried this with the original builders who own the covenant and essentially they wanted proof of granted planning permission, a copy of the plans and £600 to rubber stamp it their end.
once rubber stamped, its deemed ok by them and would accompany the title deeds when selling.
effectively a nice little money earner post the original build phase
once rubber stamped, its deemed ok by them and would accompany the title deeds when selling.
effectively a nice little money earner post the original build phase
glm1977 said:
We queried this with the original builders who own the covenant and essentially they wanted proof of granted planning permission, a copy of the plans and £600 to rubber stamp it their end.
once rubber stamped, its deemed ok by them and would accompany the title deeds when selling.
effectively a nice little money earner post the original build phase
I know all vendors are different but if all they want is £600 I'd be happy to take that on the chin should they come after me in the first 12months of building it. It's if they demand silly money I'd be pi$$ed!!once rubber stamped, its deemed ok by them and would accompany the title deeds when selling.
effectively a nice little money earner post the original build phase
hi we are having a problem with restive covenants!! we are keen to buy a house and run our catering business from home, but the covenant says the house can only be used for private resistance!!! ask our solicitor about indemnity insurance and they said we couldn't get insurance as we haven't breached the covenant yet!! is this right?? all seems a bit strange!! and no way forward seems possible
any advice would be much appreciated
tom
any advice would be much appreciated
tom
ksSolicitor is wrong with his reason, but that doesn’t mean you can definitely get RCI cover. That will be affected by the age of the covenant, the nature of the benificiary, whether neighbors have a similar covenant.
Plus no title indemnity insurance is a panacea, make sure you read the policy carefully.
Countrywide legal indemnities would be my starting point too, but there are other providers, again you have to go through a solicitor as they rarely deal with the public.
My final note on title indemnities. By the time you have satisfied the insurers enough to put a policy on risk you will be certain that there is almost nil risk.
Plus no title indemnity insurance is a panacea, make sure you read the policy carefully.
Countrywide legal indemnities would be my starting point too, but there are other providers, again you have to go through a solicitor as they rarely deal with the public.
My final note on title indemnities. By the time you have satisfied the insurers enough to put a policy on risk you will be certain that there is almost nil risk.
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