Legal Q&A: I would like to sell my flat but potential buyers' solicitors are questioning the indemnity policy – what can I do?

I bought my flat two years ago and I am trying to sell it but buyers are questioning my indemnity policy which was provided instead of planning permission and Building Regulations approval. What can I do?
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Question: I bought a flat in a converted house nearly two years ago. Due to a lack of planning permission and Building Regulations approval, an indemnity policy is in place. This was accepted by my solicitor at the time of purchase. I am now trying to sell, but potential buyers’ solicitors are questioning the indemnity policy. I am keen to sell and have thought about auctions. What else can I do?
Answer: If the necessary statutory consents — planning and Building Regulations — were not obtained, the conversion works are likely to be unauthorised and may not comply with the minimum standard of construction laid down by the relevant Building Regulations. This means buyers cannot be sure the work was carried out properly and safely.
An indemnity policy will provide insurance cover against the risk of enforcement action being taken by the relevant local authority, but it will not ensure the safety of the conversion works. When you purchased, your solicitor could also have requested a building guarantee for you, or a professional consultant’s certificate.
Auction buyers are likely to expect to see relevant planning and Building Regulations consent for a property converted into flats only two years ago.
To sell, you may need to rectify the position, so instruct a surveyor to inspect the flat and advise whether you are likely to get retrospective Building Regulations consent. The other flat owners may be interested in joining you in this.
Consider whether your solicitor advised you of the risk of indemnity insurance when you purchased, and of the likely future issues you may face when selling.

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If you have a question for Fiona McNulty, please email or write to Legal Solutions, Homes & Property, London Evening Standard, 2 Derry Street, W8 5EE. We regret that questions cannot be answered individually but we will try to feature them here. Fiona is legal director in the real estate group of Foot Anstey LLP in Exeter.
These answers can only be a very brief commentary on the issues raised and should not be relied on as legal advice. No liability is accepted for such reliance. If you have similar issues, you should obtain advice from a solicitor.

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