No-Search Indemnity Policy

A No-Search Indemnity Policy is a type of insurance policy used in property transactions, particularly in the context of remortgaging. It is designed to protect lenders and sometimes buyers from potential issues that could arise from not conducting certain property searches during the conveyancing process. These searches typically include local authority searches, drainage and water searches, and environmental searches, among others.

Purpose and Benefits

The primary purpose of a No-Search Indemnity Policy is to expedite the conveyancing process by allowing transactions to proceed without the delay of waiting for search results. This can be particularly beneficial in remortgaging scenarios where time is of the essence, or when the property is being transferred between family members and the parties are already familiar with the property.

The policy provides financial protection against any adverse matters that would have been revealed by the searches. For example, if a local authority search would have disclosed a planning enforcement notice, the policy would cover the financial implications of such an issue.

Coverage

The coverage and conditions can vary between insurance providers, but generally, the policy addresses potential risks and financial losses arising from issues that would have been revealed by the searches. Coverage typically includes:

• Planning and Building Regulations: Protection against enforcement actions for breaches of planning permission or building regulations.
• Environmental Issues: Coverage for contamination or other environmental risks that would have been identified in an environmental search.
• Water and Drainage: Issues related to water supply and drainage that could affect the property’s value or usability.

Limitations

While No-Search Indemnity Policies offer significant benefits, they also have limitations. They do not cover issues that were known to the parties at the time of the transaction or could have been discovered through other means, nor do they cover matters that arise after the policy is in place. Additionally, they do not provide protection against physical defects in the property or issues that would be revealed by a survey.

While the policy offers protection, there are risks involved which require consideration. If a significant issue arises later, the indemnity may not cover all associated costs or future problems, potentially resulting in unexpected expenses.

Use in Practice

In practice, the decision to use a No-Search Indemnity Policy is often driven by the lender’s requirements. Some lenders may insist on full searches, while others may accept indemnity insurance as an alternative. The policy is typically arranged by the conveyancer or solicitor handling the transaction, and the cost is usually borne by the borrower.

Conclusion

A No-Search Indemnity Policy can be a useful tool in the conveyancing process, particularly for remortgages where speed is a priority. It provides a level of security for lenders and can facilitate transactions that might otherwise be delayed by the search process. However, it is important for all parties to understand the scope and limitations of the coverage to ensure that it meets their needs.

For professional advice on conveyancing or any other property-related legal matters, please contact Chan Neill Solicitors LLP. Our experienced team provides expert guidance through every step of the property purchase process. We pride ourselves on delivering tailored solutions and ensuring a seamless, stress-free experience.

This article is provided for general information only. It is not intended to be and cannot be relied upon as legal advice or otherwise. If you would like to discuss any of the matters covered in this article, please contact us using the contact form or email us on reception@cnsolicitors.com