I was recently asked to prepare an article on behalf of a Northern Ireland Property Magazine “Folio” on Defective Title Indemnity Insurance. In this article I made various comments about the increase in use of Defective Title Indemnity Policies in residential conveyancing. My article also appears on our website
Since completing this article I have been asked to participate in a new pilot scheme being organised by First Title, one of the leading providers of Defective Title Indemnity Insurance Policies in Northern Ireland. First Title launched their new Home Owners Protection Policy (HOPP) in England and Wales in September 2010. This Policy is designed to give purchasers more protection than they would normally obtain from their solicitors under the Professional Indemnity Insurance Master Policy. I had heard of this launch and was intrigued by the same. I am always open to new methods and procedures relating to conveyancing practices that will make the conveyancing process smoother, speedier and fairer for all parties.
I had a number of meetings with First Title last autumn when they launched the Home Owners Property Policy. I examined their documentation and felt that the concept was commendable. It does appear to have taken off in England & Wales and it may become part and parcel of the conveyancing process there and here.
So what is a HOPP?
Prior to Murray Kelly Moore’s launching of our HOPP pilot scheme on 1st September, 2011, I had a number of larger transactions that had complexities which were very difficult to resolve, which is quite often the case. In a complicated transaction the client is advised by the solicitor that certain matters are not perfect and there is an element of risk in proceeding with the transaction because problems cannot be completely resolved. During a number of these transactions I indicated to my clients would they be interested if I could obtain a separate Insurance Policy to provide them with comfort regarding these difficulties. As the clients at the time were fully aware of the complexities that had arisen during the transactions, they fully understood that there was nothing further that we could do, or could be practically done, and that there was an element of risk in relation to the problems that had arisen. Each of those clients indicated that they would be interested in obtaining a special Home Owners Property Protection Policy. Unfortunately, I was unable to provide them with such a Policy as it was not available in Northern Ireland. I was quite surprised at how quickly my clients understood the concept of the HOPP and saw it as a positive.
In simple terms the HOPP is the equivalent to the purchaser of white goods from the local electrical supplier. Some clients always look to obtain the additional three year guarantee at an additional cost while others never seek such guarantee and they rely on the usual one year guarantee and their consumer rights. In a property transaction, which everybody knows is probably the biggest financial commitment that anybody makes, it is helpful that we can advise a purchaser client that they can obtain additional protection over and above the normal protection they receive from their solicitor. This in no way undermines the duty of the solicitor to carry out his usual and rather complicated functions but, in recent times during the current recession it has become more and more evident that problems can arise, for example in repossession transactions or in purchasing from a personal representative in a probate where there is simply a lack of information that a purchaser would normally obtain and rely upon. The Property Certificates & Searches obtained by the Purchaser’s solicitor are just not enough. The Replies to Pre-Contract Enquiries are so crucial to the residential conveyancing system that the weakness of these replies when being given by a Lender in repossession or by a distant relative acting as a personal representative in a deceased sale can be catastrophic. The Purchaser needs to be aware of these added risks and other risks such as fraud, boundary difficulties, etc., etc. They need to have the option to decide whether or not they are going to take that risk or insure against that added risk.
Murray Kelly Moore are keen to offer this opportunity to our purchaser clients so that they can avail and benefit from the current pilot scheme that we are running. At this stage we simply provide the purchaser client with the information available, copies of which are attached, but there is no hard sell. We pride ourselves on our independence and the independent advice we give to each individual client, whether vendor or purchaser. There is no financial award gained by us if a purchaser client decides to avail of the HOPP. We are totally opposed to referral fees and we can confirm that we do not receive any payment whatsoever from First Title or any other provider of Defective Title Indemnity Insurance Policies if our client obtains such a Policy.
As I stated above, and in my previous article that appeared in the Folio, I strongly believe that this type of supportive and protective insurance will assist the conveyancing process but does not in any way replace the need for the diligent conveyancer. I am unsure as to how long we will run our pilot scheme but once it has been concluded I will do a further report which will appear on our website as to my views and findings in respect of the same.