Risk protection during the conveyancing process
Last updated on January 18th, 2024 at 03:43 pm
Buying a home is a big step that involves a large outlay — money that most people can’t afford to lose. It is for this reason that there are currently a number of risk protection products on the market designed specifically to shield homebuyers from something going wrong either during the buying process or at some time in the future.
Here we will look at some of those products and what they can do for you:
Insurance
Indemnity insurance
There are a number of problems than can hold up the conveyancing process — from missing building regulation certificates to issues around planning permission. These may lead a mortgage lender to withhold funds until such issues are resolved.
Indemnity insurance cannot be used to remedy those problems, but it does guarantee financial compensation should a claim be brought in the future. Additionally, proof that the insurance cover is in place will allow a mortgage lender to proceed with the purchase.
Polices can be taken out that will cover issues around the following:
- Absence of building regulations. Alterations carried out without building regulation approval.
- Lack of planning permission. This may relate to an extension built by previous owners.
- Out-of-date local authority searches. This is relevant if the searches are over six months old at the time of completion and is known as a ‘search validation’ policy.
- Absence of easement. If there is no right of access in the deeds then access may be prevented. This is relevant to all types of easement including, rights of way, services etc.
Mortgage life insurance
Mortgage life insurance can be taken out to ensure that the family or surviving co-owner(s) of a mortgage holder is able to continue to pay the mortgage in the event of the homeowner’s death.
The pay out on such a policy decreases over time in a similar fashion to some mortgage repayment options; this type of cover is often called a decreasing term policy.
A second type of mortgage cover is ‘level term life insurance’. This policy pays a flat rate sum, regardless of how much of the mortgage has been paid off.
A solicitor cannot provide advice on this type of insurance. For further help you would need to speak to an IFA.
Searches
Searches are required as part of the conveyancing process. Some are mandatory, others will be required by mortgage lenders before they release money for the purchase, and some will be recommended by solicitors.
Searches can reveal a number of potential issues that may affect health or/and the future price of a property. The following are potential pitfalls that may be revealed by a search.
Historic contamination
Conveyancing solicitors will conduct an environmental search to identify contamination associated with the property offered for sale. In some circumstances, the current occupier of a property can be liable for contamination caused on their land by someone else.
Flooding
Flooding is an increasingly common event in England and Wales. This search will let you know if your property is vulnerable. In some cases, it may be difficult, expensive or impossible to obtain insurance for a property that is known to be at risk of flooding.
Radon gas
Radon naturally occurs in soils and rocks throughout the UK and is common is historically mined areas such as Sheffield.
Small amounts of radon gas is nothing to worry about, however it reaches particularly high levels it can pose some health risks. Searches can identify if a property lies in an area of high radon concentrations.
Wind farms
The popularity of wind farm projects is increasing throughout the UK. Unfortunately, they can be loud and considered an eyesore by many. This can make a considerable difference to the future value of your property.
Any known plans for such a development should be revealed by this optional search.
Fracking
Many homeowners are concerned that fracking near their property could lead to a reduction in their property’s value. There is nothing to stop a fracking company from drilling directly under someone’s home. There are fears that this could lead to possible subsidence, meaning increased insurance premiums.
An optional search can help to reveal future fracking plans in a property’s area. This will help potential homebuyers make an informed choice before purchase.
Conveyancing searches are a crucial part of the house-buying process. Not all are legally required, but most lenders will require you undertake searches. Cash buyers are able to proceed without any searches, however a lender will require a local search, a drainage and water search, an environmental search and in some areas a mining searches. Your conveyancing solicitor should also recommend that certain searches are carried out to ensure all essential information about the property up for sale is gathered.
