We are in the process of buying a mid-terrace in the West Midlands, built in the 1930s with a single-storey side extension that the vendor says was added in the early 1990s. Our solicitor has flagged that there is no completion certificate from building control for the extension, but has advised that an indemnity insurance policy can be put in place and that this is “standard practice for older extensions where the paperwork has been lost.”
The problem is that the Level 2 survey has noted some cracking to the internal wall between the original house and the extension, described as “minor stepped cracking consistent with differential settlement, recommend further investigation.” The surveyor did not say it was structural but did not rule it out either. When I asked the solicitor about the combination of no completion cert and the cracking, she said the indemnity covers the lack of certificate and the cracking is a separate matter for us to investigate if we want to.
I have done some reading and I think I understand the following but would appreciate correction if I am wrong:
- The indemnity policy covers the risk of the local authority taking enforcement action over the lack of building regs sign-off. It does NOT cover the cost of any remedial work if the extension turns out to be defective.
- If we contact the local authority to ask about the extension, this would invalidate the indemnity policy because it “draws attention” to the situation.
- The fact that 30+ years have passed means enforcement action is extremely unlikely anyway, so the indemnity is arguably just a formality.
My questions are: is the solicitor right that these are two entirely separate issues? Should we be getting a structural engineer to look at the cracking before we proceed, or is the surveyor’s description of “minor stepped cracking” something that most older extensions just have? And has anyone actually been in a position where the lack of a completion certificate caused problems at resale, even with indemnity in place?
I realise I might be overthinking this but we are spending a lot of money and I want to go in with my eyes open. Thank you for any thoughts.
Your three points are essentially correct. The indemnity covers enforcement risk only, not defective workmanship, and yes contacting the council would void it. Your solicitor is also right that the cracking is a separate matter, but where I would push back is on the idea that you can just park it and deal with it later. You cannot. If the cracking turns out to be structural and the extension needs underpinning or partial rebuild, you are looking at five figures and no insurance policy in the world will cover that because you knew about it before completion.
Get a structural engineer out before you exchange. Not after. A RICS chartered structural engineer, not a general surveyor. It will cost you £300 to £500 and it is the best money you will spend on this purchase. If they say it is historic settlement that has stabilised, fine, proceed. If they say it is ongoing movement, you have a very different conversation with the vendor about price.
On the resale question, I have sold a property with indemnity in place for a missing completion cert and the buyer’s solicitor accepted it without issue. But that was a straightforward loft conversion with no visible defects. Yours is different because you have visible cracking as well, and a future buyer’s surveyor will flag the same thing.
You should have instructed a structural engineer the moment the surveyor flagged differential settlement. That is not overthinking, that is basic due diligence. The indemnity is irrelevant to the cracking and your solicitor knows that, which is why she separated the two issues. Do not exchange until you have an engineer’s report in hand.
Differential settlement on a 30 year old extension isnt unusual but “recommend further investigation” from a surveyor is them saying they dont want to put their neck on the line. Get the structural engineer report and if it shows ongoing movement use it to knock the price down. The vendor knows theres no completion cert, they know there are cracks. You have leverage here.
Thank you all, this is really helpful and confirms what I was starting to think. I am going to instruct a structural engineer before we go any further. @WatchfulWendy62, when you say RICS chartered structural engineer, is there a specific directory I should be searching, or would the Institution of Structural Engineers (IStructE) find-an-engineer tool be the right place to look? I want to make sure I get someone qualified rather than a general builder who calls themselves a surveyor.
The IStructE find-an-engineer tool is exactly what you want. Filter by location and look for someone who lists residential structural surveys or domestic investigations in their specialisms. When you contact them, ask specifically for a visual inspection and written report on the cracking to the party wall between the original house and the extension, with an opinion on whether the movement is historic or ongoing. That is the question your report needs to answer.