Choose client-centric conveyancers for effective risk management
The Law Society has recently highlighted the increasingly common practice of drawing up indemnity insurance policies to cover the risks within property transactions. Of these, the most common types are insurances to indemnify planning permission and building regulation.
A further frequent area of cover is a restrictive covenant policy where, for example, previous owners have built an extension without planning permission whilst a relatively new area of cover is that taken out for a concealed development risk – for example where an extension might have slightly exceeded the planning rules.
‘Indemnity policies such as these are increasingly used to manage risk’, explained Eddie Goldsmith, Senior Partner at property solicitors Goldsmith Williams. ‘Such policies are not routinely required by lenders as they rely upon the conveyancer to protect their interests and address any property-related risks that might impact upon the lender’s security. Such indemnity policies which involve a one-off payment can last for decades and so can be a useful way of managing some of the risks within property transactions.
However it is critical that they are used appropriately so that the client’s interests are best served. There are some circumstances where it is worth having a policy in place and some where it is not – crucial to this recommendation is effective communication with the client so that they are only put in place where necessary.
Brokers should be aware of these policies and ensure that they work with conveyancers who operate in a client-centric way, using their expertise and networks to recommend a law firm who is both reputable and experienced in property matters. Those experienced firms will be best placed to make a sound judgement on when indemnity policies are or are not in the client’s best interests.’
Content correct at time of publication