House Sale - Mngmt Pack Indemnity Insurance
Discussion
Hi all.
We are selling our property. Our buyers solicitors have sent the following query over:
We note that the Transfer does not contain the necessary provisions regarding Section 121, please provide Indemnity Insurance to cover our mortgagee’s risk, We would of course expect your Client to cover the cost of this on completion.
Speaking to our solicitor he seems to think there's a distinct possibility this may cost us in the region of £150 on completion. Am I within my rights to refuse to pay this? It relates to an old clause that a management company could repossess a property in the event of unpaid management fees. I fail to see how we as the sellers of the property should be liable to cover this insurance. I have provided proof that we are completely up to date with payments up to January 2026, so there's no issue there.
Could we be forced into covering the cost of the insurance? Sigh, this process properly sucks.
We are selling our property. Our buyers solicitors have sent the following query over:
We note that the Transfer does not contain the necessary provisions regarding Section 121, please provide Indemnity Insurance to cover our mortgagee’s risk, We would of course expect your Client to cover the cost of this on completion.
Speaking to our solicitor he seems to think there's a distinct possibility this may cost us in the region of £150 on completion. Am I within my rights to refuse to pay this? It relates to an old clause that a management company could repossess a property in the event of unpaid management fees. I fail to see how we as the sellers of the property should be liable to cover this insurance. I have provided proof that we are completely up to date with payments up to January 2026, so there's no issue there.
Could we be forced into covering the cost of the insurance? Sigh, this process properly sucks.
Xenoous said:
Hi all.
We are selling our property. Our buyers solicitors have sent the following query over:
We note that the Transfer does not contain the necessary provisions regarding Section 121, please provide Indemnity Insurance to cover our mortgagee’s risk, We would of course expect your Client to cover the cost of this on completion.
Speaking to our solicitor he seems to think there's a distinct possibility this may cost us in the region of £150 on completion. Am I within my rights to refuse to pay this? It relates to an old clause that a management company could repossess a property in the event of unpaid management fees. I fail to see how we as the sellers of the property should be liable to cover this insurance. I have provided proof that we are completely up to date with payments up to January 2026, so there's no issue there.
Could we be forced into covering the cost of the insurance? Sigh, this process properly sucks.
Did your solicitor say if they could even get an indemnity for this? I can see perhaps how you could insure against action caused by the old owner not paying (if something came up after sale), but who would indemnify the new owner against action if they chose not to pay fees??We are selling our property. Our buyers solicitors have sent the following query over:
We note that the Transfer does not contain the necessary provisions regarding Section 121, please provide Indemnity Insurance to cover our mortgagee’s risk, We would of course expect your Client to cover the cost of this on completion.
Speaking to our solicitor he seems to think there's a distinct possibility this may cost us in the region of £150 on completion. Am I within my rights to refuse to pay this? It relates to an old clause that a management company could repossess a property in the event of unpaid management fees. I fail to see how we as the sellers of the property should be liable to cover this insurance. I have provided proof that we are completely up to date with payments up to January 2026, so there's no issue there.
Could we be forced into covering the cost of the insurance? Sigh, this process properly sucks.
ozzuk said:
Did your solicitor say if they could even get an indemnity for this? I can see perhaps how you could insure against action caused by the old owner not paying (if something came up after sale), but who would indemnify the new owner against action if they chose not to pay fees??
They can. The clause relates to 'Rent Charges' by the management company that look after the estate. It's essentially an indemnity policy to cover the mortgage company in the event the buyers of our property fail to keep up payments to the management company. In effect, if they were to stop paying the fees, the management company have the legal right to start a repossession order. My argument is how on earth can they possibly expect us to pay for that? I should add the property is a freehold on a 'new build' estate, completed in 2018.
TownIdiot said:
Someone will have to pay it if the bank is insisting upon the cover
So it's just down to a negotiation.
Understand, but why would I, the client selling the property, be responsible for the purchasers mortgage company requiring this indemnity cover? That makes no logical sense in my head. If it needs paying, that's on the purchaser surely? It's not my mortgage! So it's just down to a negotiation.
TownIdiot said:
Tell them that then. They can't force you to pay it.
It will be my first response. I won't let it get in the way of the house sale, but I'm extremely against paying this. The whole process is full of a few hundred quid here, a few hundred quid there. We haven't even exchanged yet and we've spent thousands...Xenoous said:
It will be my first response. I won't let it get in the way of the house sale, but I'm extremely against paying this. The whole process is full of a few hundred quid here, a few hundred quid there. We haven't even exchanged yet and we've spent thousands...
In the end you just have to decide if it's worth losing the sale.And the buyers will have to decide if it's worth it to buy your place.
Xenoous said:
Hi all.
We are selling our property. Our buyers solicitors have sent the following query over:
We note that the Transfer does not contain the necessary provisions regarding Section 121, please provide Indemnity Insurance to cover our mortgagee’s risk, We would of course expect your Client to cover the cost of this on completion.
Speaking to our solicitor he seems to think there's a distinct possibility this may cost us in the region of £150 on completion. Am I within my rights to refuse to pay this? It relates to an old clause that a management company could repossess a property in the event of unpaid management fees. I fail to see how we as the sellers of the property should be liable to cover this insurance. I have provided proof that we are completely up to date with payments up to January 2026, so there's no issue there.
Could we be forced into covering the cost of the insurance? Sigh, this process properly sucks.
I'm guessing your property is Leasehold? If so it's normal (when selling) to ask the Freeholder or Management Company to provide a Leasehold Information pack which tells the buyer all the costs that they are liable for as well as whether or not the current owner is up to date with their payments. The Management company normally charge IRO £300 for this. It's a complete rip-off but that's one of the perks of being the Freeholder.We are selling our property. Our buyers solicitors have sent the following query over:
We note that the Transfer does not contain the necessary provisions regarding Section 121, please provide Indemnity Insurance to cover our mortgagee’s risk, We would of course expect your Client to cover the cost of this on completion.
Speaking to our solicitor he seems to think there's a distinct possibility this may cost us in the region of £150 on completion. Am I within my rights to refuse to pay this? It relates to an old clause that a management company could repossess a property in the event of unpaid management fees. I fail to see how we as the sellers of the property should be liable to cover this insurance. I have provided proof that we are completely up to date with payments up to January 2026, so there's no issue there.
Could we be forced into covering the cost of the insurance? Sigh, this process properly sucks.
Sometimes you can convince the buyers solicitor that it's not needed by providing them with an up to date Statement of Account. if you can't provide either the LIP or the SoA then the Buyer's solicitor is within their rights to ask you to take pout an idemnity. Tbh I'm surprised your own Solicitor hasn't explained this.
More info here
There is only one person you NEED to ask this question of.
YOUR solicitor.
Sadly it is a very common scenario & is a total con squarely sat in the laps of the conveyancing business.
It is an insurance policy for something that is uninsurable and a policy that is literally impossible to claim against.
YOUR solicitor.
Sadly it is a very common scenario & is a total con squarely sat in the laps of the conveyancing business.
It is an insurance policy for something that is uninsurable and a policy that is literally impossible to claim against.
Xenoous said:
They can. The clause relates to 'Rent Charges' by the management company that look after the estate. It's essentially an indemnity policy to cover the mortgage company in the event the buyers of our property fail to keep up payments to the management company. In effect, if they were to stop paying the fees, the management company have the legal right to start a repossession order.
My argument is how on earth can they possibly expect us to pay for that? I should add the property is a freehold on a 'new build' estate, completed in 2018.
Mostly correct with the exception of one quite important point…My argument is how on earth can they possibly expect us to pay for that? I should add the property is a freehold on a 'new build' estate, completed in 2018.
It does not provide cover if the buyer decides not to pay… in fact the policy would explicitly exclude this. The cover is in place to indemnify the lender for the house being repossessed for historical non-payment of charges.
The bank don’t want to lend a 6 figure sum to someone and subsequently it comes to light that Derek Smith who owned the property in 1953 refused to pay his charges. The terms of the lease technically allow ABC management to repossess the property and suddenly we have 1 homeless family and 1 bank 6 figures down the river.
Clearly, the chances of this happening are next to nil, but banks are very risk adverse, especially when they aren’t footing the bill for the indemnity.
Of course, you don’t HAVE to pay for this, but the lender won’t back down either. If your buyer can’t access his funds, he (or she) can’t buy your house.
By all means be principled, but in the grand scheme of a house sale/purchase… I would cough up the few hundred quid 😊
Nick_13 said:
Mostly correct with the exception of one quite important point…
It does not provide cover if the buyer decides not to pay… in fact the policy would explicitly exclude this. The cover is in place to indemnify the lender for the house being repossessed for historical non-payment of charges.
The bank don’t want to lend a 6 figure sum to someone and subsequently it comes to light that Derek Smith who owned the property in 1953 refused to pay his charges. The terms of the lease technically allow ABC management to repossess the property and suddenly we have 1 homeless family and 1 bank 6 figures down the river.
Clearly, the chances of this happening are next to nil, but banks are very risk adverse, especially when they aren’t footing the bill for the indemnity.
Of course, you don’t HAVE to pay for this, but the lender won’t back down either. If your buyer can’t access his funds, he (or she) can’t buy your house.
By all means be principled, but in the grand scheme of a house sale/purchase… I would cough up the few hundred quid ??
There is no point of trying to hold to a principle that's wrong!It does not provide cover if the buyer decides not to pay… in fact the policy would explicitly exclude this. The cover is in place to indemnify the lender for the house being repossessed for historical non-payment of charges.
The bank don’t want to lend a 6 figure sum to someone and subsequently it comes to light that Derek Smith who owned the property in 1953 refused to pay his charges. The terms of the lease technically allow ABC management to repossess the property and suddenly we have 1 homeless family and 1 bank 6 figures down the river.
Clearly, the chances of this happening are next to nil, but banks are very risk adverse, especially when they aren’t footing the bill for the indemnity.
Of course, you don’t HAVE to pay for this, but the lender won’t back down either. If your buyer can’t access his funds, he (or she) can’t buy your house.
By all means be principled, but in the grand scheme of a house sale/purchase… I would cough up the few hundred quid ??
Xenoous said:
Understand, but why would I, the client selling the property, be responsible for the purchasers mortgage company requiring this indemnity cover? That makes no logical sense in my head. If it needs paying, that's on the purchaser surely? It's not my mortgage!
With you on this. Anyone who wants any potential loss covered takes out their own indemnity. Not get others to take out indemnity on their behalfI've had a smilar indemnity issue before ..... it really all depends on one party backing down and paying for the indemnity, and that's usually the party who thinks they have the most to lose, it's not much concerned with whether it's fair or not.
Your solicitor may be able to get the policy for less than you think - mine did ...... I don't know for certain but I wouldn't be suprised if the solicitor was able to buy the policy for less than they actually charge you for it.
Even if it's £150, why not offer to share the cost with the seller 50/50? ..... it might save a bit of a standoff.
Your solicitor may be able to get the policy for less than you think - mine did ...... I don't know for certain but I wouldn't be suprised if the solicitor was able to buy the policy for less than they actually charge you for it.
Even if it's £150, why not offer to share the cost with the seller 50/50? ..... it might save a bit of a standoff.
Pay for the insurance. If this relates to a rent charge then it's way cheaper than trying to sort it out by any other means. Rent Charges are onerous because it gives the beneficiary under certain circumstances the right to enter the property and essentially take it. Who wants that? You don't have to pay for it but it would be the decent thing to do and your Buyer might push back in any event. Did you get a policy when you bought it? Is so it should be able to be topped up.
Xenoous said:
They can. The clause relates to 'Rent Charges' by the management company that look after the estate. It's essentially an indemnity policy to cover the mortgage company in the event the buyers of our property fail to keep up payments to the management company. In effect, if they were to stop paying the fees, the management company have the legal right to start a repossession order.
My argument is how on earth can they possibly expect us to pay for that? I should add the property is a freehold on a 'new build' estate, completed in 2018.
Why are you paying charges to a management company if you are freehold?My argument is how on earth can they possibly expect us to pay for that? I should add the property is a freehold on a 'new build' estate, completed in 2018.
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