Do You Need Full Searches Or Search Insurance?
Do you need to make full searches, or should you take out search insurance?
‘Need’ is probably the wrong word to use when talking about searches – it’s all a matter of assessing the risks and seeing how comfortable you feel with taking them. It’s true that making full searches on a property is more costly than insurance and can take anywhere between five days to several weeks to come back. So waiting for search results could potentially extend the time it takes to complete your purchase.
But whilst taking insurance saves money and time, you must also accept that insurance does not guarantee complete protection or certainty and the gamble could actually end up costing more money in the long term.
So what’s the difference between searches and indemnity insurance?
Full searches can include:
– Water and Drainage searches.
– Local Search (done by the local Council authority)
– Environmental Search
– Mining search
– Contaminated Land search (radon report)
Search insurance is a policy which provides cover should something be found to negatively affect the value of a property.
Search Indemnity Insurance
Remember, the cost and time it takes to make searches can vary drastically according to the locality in which the property is based. Some councils will have a faster turnaround time than others, so it is worth asking your solicitor about the current estimate for search results when deciding whether searches are appropriate for your timescale.
Some mortgage lender will stipulate that the borrower must make searches as part of their terms and conditions. Obviously this varies between different mortgages and lenders, so it’s best to ask your mortgage advisor if in any doubt. These conditions are not usually negotiable, so assume that you must make searches if your lender requires them.
It’s not just about saving money by taking the cheaper insurance. To an extent, searches can reveal aspects of the property you may not discover until moving in (and which the sellers are either unaware of or reluctant to reveal). So whilst search insurance does provide some cover in the case of damage to the value of a property, it is offers no protection to your living quality once you have moved in. For instance, moving into a property which is liable to heavy flooding or subsidence is still likely to be a nasty shock and somewhat difficult to put up with, regardless of search insurance.
It’s especially worth considering if these sorts of things may be enough to put you off the property entirely, or would negate an aspect of the property which had been a major selling point. For example, if a spectacular view had been one of the reasons you put an offer on a certain property, a search might reveal a upcoming building development which could potentially spoil the view and completely change your mind! It all comes down to weighing up the risks.