When buying a property, most people don’t expect to be faced with ancient covenants, missing deeds, or rights of way that no one knew about. But these issues – known as title defects – are more common than you might think. As conveyancing solicitors, one of our key roles is to uncover them and decide how best to manage the risk. Sometimes the answer is straightforward. Other times, we have to reach into the legal toolbox and pull out something called indemnity insurance.
So what exactly is title indemnity insurance, and when should it be used? Let’s break it down.
What is a Title Defect?
A title defect is any legal issue with the ownership or use of a property that could affect the buyer’s rights. This might include:
- A missing right of way (e.g. the property has no legal right to access the main road);
- A restrictive covenant (a rule in an old deed that says, for example, you can’t build an extension);
- A breach of a covenant by a previous owner;
- Lack of planning or building regulation approvals for old works;
- Unregistered easements (such as informal access paths);
- Lost or missing deeds (especially in unregistered land).
These defects can make a buyer or lender nervous. If left unresolved, they might affect the property’s value, future saleability, or even result in legal action.
What is Title Indemnity Insurance?
Title indemnity insurance is a one-off insurance policy taken out to cover the risk of a defect causing loss. It does not fix the defect. Instead, it offers financial protection in case the issue ever causes a real-world problem.
For example, if there’s a restrictive covenant that says you can’t extend the property, but an extension has already been built, an indemnity policy could cover the cost of defending any future legal claim.
Policies are usually inexpensive (often under a few hundred pounds), last indefinitely, and are transferable to future buyers and lenders.
When Should Indemnity Insurance Be Used?
Not every title issue needs indemnity insurance. Sometimes, it’s better to resolve the issue directly (for example, by getting a deed of variation or applying to register a right of way). However, there are situations where indemnity insurance is the practical, commercial solution:
-
- The Defect is Historical and the Risk is Remote
For example, a breach of covenant from 40 years ago that has never been enforced. - The Seller Cannot Remedy the Defect
If a right of way was never properly granted and the neighbouring landowner refuses to cooperate. - Lenders Require Protection
Mortgage lenders often insist on indemnity cover for missing consents or rights. - Time or Cost Constraints
Insurance can avoid lengthy negotiations or tribunal applications.
- The Defect is Historical and the Risk is Remote
Limitations and Cautions
Indemnity insurance isn’t a silver bullet. It comes with conditions – and if you breach them, the policy may become void. For example, most policies will be invalidated if you approach a third party (like a neighbour or the council) to ask about the defect.
Also, indemnity policies do not cover:
- Loss of value due to general stigma;
- Physical repair costs (e.g. fixing structural problems);
- Future planning applications that might uncover the defect.
That’s why it’s important to understand what you’re getting – and not getting – with the policy.
Final Thoughts
Title defects can sound intimidating, but they’re not always deal-breakers. With our team of experienced conveyancers at Lisa’s Law and proper risk management, they can often be dealt with swiftly and safely. Indemnity insurance is indeed often very useful in a conveyancer’s kit – but it should be used wisely and only where appropriate.
If you’re buying a property and your solicitor mentions a “title defect,” don’t panic. Ask for a clear explanation of the risk, whether insurance is suitable, and what it will (and won’t) protect you against.
Have questions? Get in touch today!
Call our office on 020 7928 0276, we will be taking calls from 9:30am to 6:00pm.
Email us on info@lisaslaw.co.uk.
Or, use the contact form on our website. Simply enter your details and leave a message, we will get right back to you: https://lisaslaw.co.uk/contact/
For more updates, follow us on our social media platforms! You can find them all on our Linktree right here.
