Indemnity Policies: A Quick Fix But Watch The Pitfalls

Indemnity policies are commonly used in conveyancing transactions to overcome legal issues which could otherwise stall, delay or even kill a transaction completely. Indemnity polices do not resolve the legal issue that has arisen but rather provide cover for the risk that has been identified and any associated cost that may follow any enforcement action.

More and more clients and solicitors are willing to accept indemnity policies for an ever growing list of legal issues and problems but as with all good things there comes restrictions as to when a policy will be valid and can be used to cover any potential risk that is posed to a would be buyer and lender. Your solicitor should be able to advise whether an indemnity policy is suitable or not.

The most common mistake that Estate Agents and clients make, when trying to assist to resolve a legal issue is to make disclosure to a third party which in turn means the insurance is no longer available.

By way of example, a client or Estate Agent seeking to resolve a situation where there are no building regulations and trying to be helpful may contact Building Control to check if they can search for the relevant consents or to enquire about the possibility of retrospective consent. By doing so you or the Estate Agent have made a...