Absence of Easement Legal Indemnity Insurance: a case study in conveyancing risk management
A series of case study articles giving real life examples of the benefits of specialist Legal Indemnity Insurance: protection for the insured and risk management for conveyancing solicitors.
In today’s busy conveyancing market speed is of the essence. In this article, we look at a case study example of where CLS provided Absence of Easement Legal Indemnity Insurance was used rather to overcome the need for a potentially lengthy negotiation on access rights.
The mid-terrace access problem
Our case study is the classic case of the insured wanting to purchase a mid-terrace property without a documented right of access to cross her neighbour’s garden to access the rear of her property. The problem was how to get the bins out on bin day without a legal easement.
Enquiries by the conveyancing solicitor revealed that the seller of the property had bought the house from the local authority and had used the accessway or bin alley since the 1970s. However, when the seller had purchased the house from the local authority the right of access was not contained in the deeds.
The purchaser had three options:
- Walk away and try and find another house in budget. The reality was that in the neighbourhood any new property in the same price bracket was likely to be another mid-terrace house and would potentially have survey or easement issues. The purchaser felt committed as she had incurred fees and wanted to go ahead. How many times have conveyancers heard the phrase ‘’dream property’’?
- Try to negotiate a suitable right of access or easement with the owner of the neighbouring property. The owner of the neighbouring property was the local authority as the end terrace remained council property, let to a tenant. The purchaser did not want to incur the delay or costs in approaching the local authority.
- A Legal Indemnity Insurance policy. As the purchaser was committed to the mid-terrace and wanted to proceed regardless, her conveyancing solicitors advised that, in the absence of negotiating with the local authority to secure a documented easement, an Absence of Easement Insurance policy was crucial. To the purchaser, the insurance policy provided a quicker and cheaper solution than sorting out written easement rights over the neighbouring property.
The insured accepted her conveyancing solicitor’s guidance that if she was determined to proceed with her purchase there were significant benefits of Absence of Easement Legal Indemnity Insurance (also referred to as an Access Indemnity policy). The purchaser was recommended to take out a CLS standard online Absence of Easement policy. Once the decision had been taken to go ahead with the property purchase the policy was secured online within a matter of minutes.
The Absence of Easement Legal Indemnity solution and pay out
Fast forward 3 years and the insured has a new neighbour. The local authority had sold the end terrace and the purchaser planned to construct a rear extension to their house over the accessway. This was something that the conveyancing solicitor had warned the insured about when outlining the insured’s options. After all, it was foreseeable that the local authority would sell the council property to a private individual who would want to maximise the potential of their property.
Thankfully, the insured was able to locate her Legal Indemnity Insurance policy and a claim was made by the insured on the CLS Absence of Easement insurance.
- Action: CLS responded by immediately instructing panel solicitors to contact the insured’s neighbour. Speed was vital to ensure the insured’s rights were protected before the neighbour started work on their extension. The panel solicitors sent a letter before action highlighting the insured’s rights and explaining that an infringement of her rights could result in an injunction application. The neighbour was adamant that they were within their rights to build an extension on their land, in the absence of a written access easement or evidence, and they were not prepared to negotiate or compromise.
- Assessment: Legal advice was that the insured’s legal position over the lack of written easement was not strong although her legal indemnity policy covered the financial cost of defending her continued use of the access route. The insured’s neighbours were well informed as to their rights. The best option for the insured wasn’t litigation as the prospects of success were assessed as poor.
- A solution was reached after the insured’s property was valued with and without the benefit of the access easement. With the surveyor’s advice, CLS quantified the insured’s loss at £7,500; the property price differential between buying a property with a right of access and one without. The access route was used for bins, with the insured still able to access her garden, so the surveyor assessed a relatively modest price differential.
- The outcome was a £7,500 payment to the insured plus payment of legal costs amounting to £9,000. The total policy pay out was £16,500 for an Absence of Easement Legal Indemnity Insurance policy that cost the insured under £100 when she purchased the home 3 years earlier.
- The take out : an online Absence of Easement Legal Indemnity Insurance policy is not only a cost-effective solution to the fairly standard mid-terrace access and easement issues but also a speedy one. A conveyancing complaint and professional negligence claim avoided through the conveyancing solicitor’s choice of Absence of Easement Legal Indemnity Insurance.
If you are a conveyancing solicitor under pressure to complete before the end of the stamp duty holiday these case studies evidence how Legal Indemnity Insurance can provide a quick and cost-effective solution for purchasers, giving peace of mind and managing risk.
CLS here to help
CLS has over 15 years of experience in helping conveyancers with both residential and commercial property transactions. Our online portal is free to register and you’ll find our range of over 60 policies and products at your fingertips – including Variable Statements of Fact to let you customise to your client’s needs for the full range of legal indemnity policies including Absence of Easement Policies. Online indemnity insurance protection can be available within a matter of minutes. If you’d rather speak to someone, we also have a team of specialists who can help you out with a bespoke offline policy. Click here to start working with us.
This article was submitted to be published by Groundsure as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.