Indemnity policies are a type of insurance. They cover different types of risks or legal defects relating to a property that either cannot be resolved or would be very costly and/or time consuming to do so.
In other words, they are taken out as an alternative method to rectifying an issue and are a one-off payment. The cost of the indemnity policy can be paid by either the buyer or the seller.
The most common types of indemnity policies include:
- Cover for missing legal deeds
- Lack of planning permission
- Lack of building regulations
- Breach of restrictive covenant
It is usual for indemnity policies to cover the buyer, future buyers and mortgage lenders as well as covering legal costs for claims made by a third party in relation to the issue.
It is important to note that each indemnity policy is unique and therefore the terms of the policy must be read carefully. For example, most indemnity policies do not cover the cost of repair, maintenance and/or replacement of something so it’s important to be aware what’s included in yours. In addition to this, the policy will require the policyholder to comply with certain conditions to prevent it becoming invalidated.
For more information or advice on indemnity policies, contact our conveyancing team today.