There seems to be a tendency these days to take the easy route whenever a problem with title arises. Rather than carrying out investigation to inquire whether an alternative solution exists, an increasing number of conveyancers are turning to indemnity insurance to ‘plug the hole’.
I can understand the reason. Conveyancing fees are being squeezed and there is pressure to move transactions quickly and with the minimum of case handler input. On top of this is the increased pressure we all receive from clients to ensure there is minimum delay during the process. Clients generally have only two priorities when moving home - to move quickly and at little cost.
It is often easier for a practitioner to ask the client to pay for the indemnity policy than to ask for extra fees to investigate other solutions.
I question however whether taking out indemnity cover is always the right decision to take. Take for example the lack of building regulations. Yes insurance is available to cover the cost of enforcement action but this does not address whether the loft conversion for instance is structurally safe. I recognize this should be pretty evident to most of us but there is wide spread ignorance of cover afforded by indemnity policies.
In my view insurance should be viewed as a ‘last resort’ solution and one that should only be used after investigations of other solutions are at an end. Yes this would mean extra work but if the reason for this is explained then there should not be any problem obtaining money from the client.
Conveyancers should always check the terms and limitations of policy cover; failure to do so could result in a negligence action. Conveyancers should also when a lender is involved consider the policy of the particular lender relating to the use of such policies. If a policy already exists always check it against the current valuation of the property and consider if necessary top up insurance.
My other issue with indemnity policy is that there is no register to check whether a policy on a property has been previously established. It would not take too much for the Land Registry to make it a requirement that policies activated on a property should be noted on the title.
Perhaps another answer is the adoption of a property logbook – as a firm we have developed an electronic logbook into which we upload for clients all documents (including the indemnity policy) relating to the property and which they will need when they come to sell. We also include a loyalty voucher to ensure as best we can that the client comes back to us in the future. If anybody wishes to know more about this product please feel free to email me
Morgan Jones and Pett are solicitors who provide legal advice and services to clients based in England and Wales and who can be contacted on 01603877000 or via email at davidpett@m-j-p.co.uk
