The Conveyancing Custom: Seller's Duty of Good Title
In England and Wales, residential property sales are governed by the principle of 'caveat emptor' (buyer beware). However, contract law places a fundamental obligation on the vendor: the seller must prove they have a 'good and marketable title' free from legal defects or encumbrances that could expose the buyer to litigation.
When a buyer's conveyancer identifies that an extension, garage conversion, or outbuilding breaches a restrictive covenant in the title deeds, a title defect exists.
Because the breach affects the marketability and mortgageability of the seller's asset, the seller is customary responsible for resolving it. In 95%+ of conveyancing transactions, the seller's solicitor agrees to pay the one-off premium from the sale proceeds on completion.
| Scenario / Circumstance | Breach Timing | Who Pays the Premium? | Legal Reason |
|---|---|---|---|
| Existing extension built without covenant consent | Past Breach (Pre-existing) | SELLER PAYS | Seller must deliver clean, marketable title |
| Existing garage converted into living accommodation | Past Breach (Pre-existing) | SELLER PAYS | Seller must satisfy buyer's mortgage lender |
| Missing developer building consent for conservatory | Past Breach (Pre-existing) | SELLER PAYS | Standard conveyancing resolution protocol |
| Buyer plans to demolish house and build 2 units | Future Intent (New build) | BUYER PAYS | Seller is not responsible for buyer's future development plans |
| Buyer plans new rear dormer loft after purchase | Future Intent (New build) | BUYER PAYS | Specific development risk undertaken by buyer |
How Payment Is Processed on Completion Day
Neither party writes a physical cheque or pays the underwriter directly.
On the day of completion, the buyer's solicitor prepares the official completion statement. The agreed indemnity insurance premium (e.g. £185.00) is deducted from the balance of sale funds sent to the seller's solicitor.
The buyer's solicitor immediately issues the policy via the underwriter's digital portal, ensuring cover is active the exact second contracts complete.
If a seller obstinately refuses to pay a £200 indemnity premium, the buyer cannot legally force them to. However, because the buyer's mortgage lender will refuse to release mortgage funds without the policy, the sale will collapse. In practice, sellers virtually always agree to the deduction to secure their sale.
Negotiation Protocol for Buyers and Sellers
Follow these practical steps when negotiating indemnity insurance liability: