A guide to absence of easement legal indemnity insurance
An Absence of Easement does not sound like a serious issue to many vendors or purchasers but conveyancing solicitors appreciate how an Absence of Easement can prevent the sale of a commercial or residential property, or stop an owner from fully enjoying their property. In this article, we consider how specialist Legal Indemnity Insurance can be the solution and what the Absence of Easement policy does and does not cover.
We look at:
- What is an Easement?
- Why is Absence of Easement Legal Indemnity Insurance necessary?
- Examples of Absence of Easement in conveyancing transactions
- Does a property owner require an Easement to access their property?
- Who can take out Absence of Easement Legal Indemnity Insurance?
- What is not covered in an Absence of Easement Legal Indemnity Insurance policy?
- Online and offline Absence of Easement policies
- Making an Absence of Easement policy claim
What is an Easement?
When looking at Absence of Easement Legal Indemnity Insurance, conveyancing solicitors know their first job is to explain what an Easement is as otherwise a vendor or purchaser does not understand the concept of ‘Absence of Easement’ and the need for a Legal Indemnity Insurance policy.
At its simplest, an Easement is the right to use an area of land which does not legally belong to the user. Normally, an Easement involves a right to travel along an accessway that is in the ownership of one or more adjacent landowners. However, an Easement can also relate to services, such as the passage of a pipe or cable across neighbouring land to the adjoining owner’s property.
Historically, Easements were created when large parcels of land were developed and rights of access were necessary for neighbouring property owners to access the front or rear of their property. However, Easements are nowadays created by one-off developers building in their back gardens and by leading building companies.
Why is Absence of Easement Legal Indemnity Insurance necessary?
Absence of Easement Legal Indemnity Insurance may be necessary where a property does not have the necessary legal rights over private land abutting the property. Legal Indemnity Insurance may be available where there is no easement or there are undocumented easements acquired by prescription. In other words, the continuous use of a pathway or accessway or services without either issue or permission by the landowner for a period of time. Normally the usage has to be for a minimum period of twenty years to gain an easement by prescription.
Without the required documented easement in the title deeds to the property, the purchaser risks reliance on undocumented usage and may not be able to enjoy their property or use it in their planned manner. A purchaser has the option of walking away from their purchase or renegotiating the sale price to reflect the risks associated with the Absence of Easement and/or taking out Absence of Easement Legal Indemnity Insurance. Legal Indemnity Insurance provides the buyer with peace of mind because if the lack of easement becomes an issue, they have insurance cover in place so that a known risk does not become an uninsured problem.
Examples of Absence of Easement in conveyancing transactions
When a conveyancing solicitor talks to a client about ‘absence of easement’ it can be hard to explain the problem that Legal Indemnity Insurance is designed to address. At CLS we come across most types of absence of easement situations but common examples are:
- No right of access across neighbouring land to access the rear garden – this is a particular issue with the mid terraces where a homeowner may have walked across a rear path behind a row of terraces for years but on sale of the property the conveyancing solicitor spots that there is no formal right of access. The new buyer risks not being able to get their wheelie bins or large garden items into or out of their rear garden. The buyer could be landlocked.
- No right to cross a strip of private unadopted land at the front of a property – an Absence of Easement could mean that technically a property owner has no right to drive over the land at the front of their property, making their driveway to park their car unusable. This can occur where the access strip is unregistered and not adopted by the highways agency. It may also result in the private road that the property abuts cannot be used for vehicular purposes meaning you can only access the property on foot. Lack of vehicular access to a driveway and garage can seriously affect the market value of a property.
- No right of way for planned purpose – although the title deeds may give a right for walking access the easement may not cover the planned continued usage, namely business visitors to the property or vehicular access.
- No right of access to maintain and repair pipes or connect to existing pipes which fall outside of the boundary of our property resulting in no permission to access third party land for the benefit of the services to your property.
- Lack of right to access land to lay services where a new development or an extension is being built.
There are many other examples of Absence of Easement that conveyancers have to alert prospective purchasers to when advising on title to a property. Failure to do so can result in conveyancing risk management issues so conveyancing solicitors are alert to the need to highlight Absence of Easement risks to purchasers who, in the excitement of purchasing their property, have:
- Overlooked the potential access issues or
- Forgotten that their mortgagor has an interest in the market value of the property or
- Have not considered that they might want to sell the property at a later date and that future purchasers may not be as willing to overlook the absence of an easement and the associated risks.
For more information on this topic have a look at our article: Absence of Easement Legal Indemnity Insurance: a case study in conveyancing risk management.
Does a property owner require an easement to access their property?
Conveyancers will be fully aware that the Access to Neighbouring Land Act 1992 enables a neighbour who needs to carry out repairs to their property but is unable to do so without going onto a neighbour’s land and does not have a legal right or licence or easement in their favour to legally gain access to do so, can access their neighbour’s land by virtue of the 1992 Act. The Act provides for access onto neighbouring land if it is reasonably necessary for the carrying out of repairs. However, this Act has limitations that need to be explained to potential purchasers. The scope of the Act does not provide a right of way to landlocked land and may well not be sufficient to safeguard a potential purchaser or satisfy a mortgage company who is lending on a proposed purchase. An absence of easement Legal Indemnity Insurance policy works hand in hand with statutory rights under the 1992 Act.
Who can take out Absence of Easement Legal Indemnity Insurance?
CLS Absence of Easement Legal Indemnity Insurance can be taken out by landowners to cover:
- Residential property of all descriptions including flats.
- Commercial property.
- Registered or unregistered land.
- Land or property where a formal easement was created but a plan referred to in the title deeds as part of the easement is missing from the deeds.
- Land with or without planning permission and development land. There is protection for continued use of the developed land.
- Property to be bought with or without a mortgage.
- Property where protection is required against a registered access way or lack of documented legal right to access the property, with or without vehicles
- Property where cover is needed for a development or property extension where services (pipes and cables) are to be laid on, over or under registered or unregistered land or where there is a lack of documented legal right to connect into and use services serving the property and to access those services for the purposes of carrying out repairs.
The main point for Absence of Easement Legal Indemnity Insurance is that whatever the nature of the non-legal easement the property owner or their predecessors must have used the accessway or pipes or other facilities regularly without any obstruction or complaint by the neighbouring land owner. If there is any ongoing dispute over the existence of the easement or the extent of usage then we could offer cover on a bespoke basis which would exclude the party who has disputed. However, if the dispute was with a neighbour a long time ago or with a party who no longer lives on the road, then we could look to offer cover as standard.
A claim would arise under the policy if the owner of the access way or services claims (and then subsequently proves) that no right has been granted to the insured to use the access/services and this is being used without a documented right. The owner will either try to restrict or stop the use of the access way or services in its entirety or, seek a monetary sum for the ongoing use of the access way and for a formal deed of easement to be created.
What is not covered in an Absence of Easement Legal Indemnity Insurance policy?
Conveyancers acknowledge that it is essential that those taking out Absence of Easement Legal Indemnity Insurance understand what their policy will and will not cover so that they can make an informed choice about whether to go ahead with their planned purchase with or without a Legal Indemnity Insurance policy.
The Absence of Easement policy does not cover:
- The insured failing or refusing to contribute to the cost of maintaining or repairing the access way or path or services (pipes and cables) if requested to do so by the owner of the neighbouring property.
- The insured interrupting or interfering with another person’s use of the access way or service. For example, if the insured blocked or damaged a pipe whilst carrying out pipe work on a neighbour’s land.
- Any loss relating to Section 34 of the Road Traffic Act 1988. This Act prohibits driving anywhere other than on roads such as bridleways, common land or footpaths.
Online and offline Absence of Easement policies
CLS offer online and offline Absence of Easement Legal Indemnity Insurance policies. An online policy can be bought within a matter of minutes to enable a sale of property to proceed with the purchaser having peace of mind that there is insurance in place. If you are not sure that an online policy will meet a more complex statement of facts our experienced team can identify if offline cover can be provided or if we will need more information to provide a bespoke policy.
An underwriter may wish to review and take into consideration the following information:
- How long has the access path or services been used for? If an access way has only been used for a couple of months, has this been a long enough time for a neighbouring landowner to object to its use? Has there been an intensification of the use of the access way? For example, the creation of a home office in a garden has increased usage and traffic including business customers visiting the office. If the access way has been used for more than twenty years, it is likely that in the event of a claim the insured can argue that they have a prescriptive easement. The availability of statutory declarations may be important.
- If there is a licence agreement to use a pathway or service this will need to be carefully assessed as the licence agreement may give the neighbouring owner the right to terminate the licence at will thus extinguishing a right that was not an easement.
- If there was a development which would likely intensify the use of the accessway or services to the property were there any objections relating to the significance on the access roads, services to the estate? Even if objections were made at planning stage, we may be able to offer cover but would need to assess the risk carefully.
- If a development is planned requiring pathway or service access over adjoining land, information is needed about who the access way is registered to and if the owner lives in the area or is a trading company. If the owner does not own neighbouring property or the company is not trading this may affect the premium but not necessarily the availability of cover.
- If a pathway is gated then more information may be needed, such as whether the gate is lockable, who has the key or keys and whether access been refused by the owner of the pathway.
- If an access path is over common land there may be a prescriptive easement. If access is across a village green prescriptive rights may not accrue if the exercise of access would interfere with use of the land for leisure or sport. Policy cover can be looked at on a case-by-case basis and offered where access to the insured property does not interfere with the use of the village green. For example, if the insured’s driveway only crosses a small part of the village green cover may be available.
- With developments and access to service pipes insurers may need to know more about ownership of the land (is it private land or a public highway and what approaches have been made to the local authority) and where the services are located, any consent to the use of the services (including whether there was correspondence or a licence created) and the potential length of the work and disruption.
If in doubt about a statement of facts or the suitability of online cover speak to our friendly specialist advisors about policy coverage.
Making an Absence of Easement policy claim
If an insured has to make a claim under their policy it is important that the insured understands that their policy cannot force the landowner to grant an easement if it is found that there is no prescriptive easement. The policy covers trying to resolve the issue with the adjoining landowner subject to compliance with the claim requirements but if resolution is not possible the insured will be able to make a claim for losses, inclusive of loss of market value of their property if the absence of easement means the property suffers a loss event. We would also want to work with the objecting party to work on ways that we can have an easement i.e. entering into a deed of easement (which may also involve a monetary payment) or the tweaking of any proposed development plans to better meet the requirements of an enforcing party.
The market value of the property is assessed by an independent surveyor who reports on the value of the property with and without an easement to determine the claim. If monetary compensation would not satisfy a purchaser of land without the benefit of a written easement (because they would only ever be satisfied with the property with full use of the easement) then an absence of easement policy may not meet the purchaser’s needs or give sufficient protection or peace of mind. Legal indemnity insurance providers are the first to say that indemnity policies are not the right option for every prospective purchaser, but with the right buyer and property, a policy can enable the conveyancing transaction to proceed with the comfort of knowing that there is insurance in place if a claim needs to be made.
CLS here to help
CLS has over 15 years of experience in helping conveyancers with both residential and commercial property transactions. Our online portal, PIPA is free to register and you’ll find our range of over 60 legal indemnity Insurance 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 legal indemnity insurance 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.
This article was submitted to be published by CLS Property Insight 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.