Legal indemnities for property
Solicitors encounter various problems in their daily dealings which can often be solved by the use of an insurance policy. Listed below are the problems most commonly encountered. It is often possible to provide an insurance solution to problems that may appear insoluble.
The policy will indemnify the purchasers and their successors in title and mortgagees in respect of capital loss and expenses arising from the specified defect in the title, should an estate right or interest adverse to or in derogation of the purchaser’s title to the property be established.
Below are listed some of the more common difficulties associated with defective titles.
 Lack of assents
An indemnity can be provided against loss sustained due to the past failure of legal representatives to assent to the vesting of the property in themselves or other beneficiaries.
 Erroneous or inadequate descriptions of land
When the description of land in title deeds is not clear and there is doubt as to whether the whole of the land now being sold was included in previous conveyances, an indemnity can be provided against adverse claims to the title.
 Land charge
If a land charges or local land charges search reveals a charge about which it is not possible to obtain full details, nor removal from the register, an indemnity can be provided in respect of loss which its existence may subsequently cause.
 Lost documents of title
 Possessory title
 Powers of attorney
Indemnities can be provided where the use of an incorrect wording in a power of attorney results in a vendor being unable to show good title.
When a property lacks necessary access rights over adjoining land, a policy can be arranged to provide an indemnity in respect of capital loss and expenses should a third party attempt to prevent the land being used as access to the property.
 Adverse third party rights
An indemnity can be arranged when property is (or may be) subject to rights of way. Cover is available where the rights have not been exercised for a number of years but if exercised would adversely affect the value of the property.
Restrictive covenants can hinder development and make the sale of land or the raising of mortgage finance difficult. When the use or proposed use of a property breaches restrictive covenants we can arrange an indemnity in respect of capital loss, damages and expenses arising from persons claiming the benefit of the restrictive covenants and exercising or attempting to exercise their right to enforce them.
When a residential lease contains no or inadequate rights of support it will often be viewed as unacceptable security by mortgagees. An indemnity can be provided to the mortgagee in respect of any deficiency in the mortgage account due to the absence of or defect in repairing covenants.
 Bankruptcy clause
Where a residential lease gives the lessor the right of re-entry in the event of the lessee becoming bankrupt or entering into arrangements with creditors, the property can be rendered mortgage-able by providing indemnities to mortgagees.
An annual policy can be provided to protect both the lessee and the mortgagee in respect of loss due to the failure of the lessor or the adjoining lessees to effect and/or maintain adequate insurance as required by the lease.
Local authorities will often grant planning permission for the erection of buildings over sewers provided that the owner of the building undertakes to pay for any increase in the cost of carrying out repairs to the sewer due to the existence of the building. An indemnity can be provided in respect of this extra liability if a call for payment is made.
British Rail leases normally include a clause which allows it to terminate the lease, without payment of compensation, should it require the property “for the purpose of its undertaking”. This situation can arise if British Rail decides to construct new lines or stations or carry out major repairs. The policy protects the Insured against the loss of residual value of the lease and all reasonable costs and expenses incurred.
An insurance company can act as a guarantor by countersigning the Letter of Indemnity normally required by Life Offices, Issuing Companies or Registrars before the proceeds can be paid over or a duplicate issued. The indemnity protects the Life Office, Issuing Company or its Registrar should the owner not comply with the terms of the Letter of Indemnity.
 Related articles on Designing Buildings Wiki
- Buy-to-let mortgage.
- Contractors' all-risk insurance.
- Directors and officers insurance.
- Joint names policy.
- Legal indemnity insurance.
- Professional indemnity insurance.
- Property ownership.
- Property rights.
- Restrictive covenants.
- Rights of way.
- What is a mortgage?
 External references
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