Time and time again I am asked by buyer’s solicitors for indemnity insurance to address the absence of building regulation approval for home improvements such as an extension. In the majority of these cases there is no justification for the cost of establishing an indemnity policy and though I do my best to argue my case I am frequently met with misconceived responses. The truth is that many conveyancers do not have the time to consider the law and the easy route is to ask for insurance.
I am sure I am not alone when I say I did not become a lawyer to ignore the law and to follow blindly practices which have through laziness become the norm. I recognise conveyancing is very much rooted in practice but there is applicable case law and statutory provision which ought at times to be considered.
So when asked for indemnity insurance to address the absence of building regulation approval and or a completion certificate a competent conveyancer should look at the facts and apply the law accordingly. The offer of indemnity insurance look be looked upon as a last resort option.
The first question to consider is when was the work carried out. If it was completed within the last 12 months then my view would be to insist on the seller seeking retrospective building regulation approval/completion certificate. The Law Society's Conveyancing Handbook, makes it clear that only where work had been done in the preceding 12 months should the purchaser's solicitor enquire whether building regulations consent was obtained and complied with. Don’t even consider indemnity insurance in these cases. This is a sticking plaster and in the words of Taylor Swift ‘Band-aids don't fix bullet holes’! Most lenders would also require retrospective consent remembering of course that the lack of approval and or a completion certificate should be reported.
If it was carried out over 12 months then the seller should be asked whether it was work undertaken under concealment which would not of course be the case if planning permission was sought. The seller should also be asked if building regulation approval has ever been refused. It should also be ascertained with reference to your clients survey whether the work is likely to give rise to serious threat to life and safety. If for example the work was undertaken 20 years ago and the works are viewed by the surveyor as sound it would be difficult to see how a local authority could even contemplate injunctive action under section 36(6) of the Buildings Act.
Keep in mind when asked for that costly and often unnecessary indemnity policy that it is there to protect the client from enforcement action under s36(6) not to provide protection if the works subsequently prove defective. So one has to weigh up the risk of enforcement and in doing this it well worth keeping in mind that in 1998 an enforcement concordat was signed and adopted by almost all local government organisations with an enforcement function. This requires building control departments when carrying out enforcement to take a consistent approach and treat matters with proportionality, effectively making it unthinkable that injunction proceedings would now be utilised in relation to a minor item of domestic building work that took place years before.
Birmingham building control unit, the largest in the country, only had to resort to court action in five cases in 2003.
In cases where I argue indemnity insurance is not necessary or indeed required those competent conveyancers acting for the buyer often trot out the argument that following the decision in Cottingham v Attey Bower & Jones  PNLR 557 there is no longer any time limit on enforcement and therefore indemnity insurance should be sought in every instance where there is no building regulation approval.
This is an interesting authority and one which is not really based on the risk of enforcement but has more to do with the defectiveness of works carried out. In Cottingham the buyer's claim related to the cost of rectification of the defective works and not loss arising out of enforcement action. In fact there was no enforcement action taken or indeed threatened. The claim would have been brought against the buyer’s surveyor and the seller had it not been for doubt as to their financial standing.
Its is also based on the the failure of the buyer’s solicitor to make adequate inquiry about building regulation approval. This would suggest that if a buyer asks about building approval and discovers this has not been sought then if in the judgment of the buyer’s solicitor there is no or little risk of enforcement ( relying for instance on the survey) it could be argued with justification that the buyer’s solicitor in not pursuing the issue has acted in the best interests of his or her client. The only proviso to this is that the buyer client should be warned there is a risk of enforcement albeit a minimal one. Providing this advice is given it would be difficult to see a Cottingham situation arising particular in the light of the 1998 Concordat.
In short there is a need to look at each individual case on its own merits and to be bold enough to make a judgement call based on both case law, statute and the practice direction of the enforcement agencies.