Selling property on a private road: need for an indemnity policy?

If you are buying or selling property served by a private road, you may need to have an indemnity policy in place, as Sophie Jones from our residential property team explains.

If you are buying or selling property served by a private road, then there are some key considerations to make. Mortgage lenders will often require conveyancers to ensure there is an adequate right of way or in absence of that an indemnity policy is in place before lending. Many people don’t know or discover there are extra steps involved concerning unadopted roads in England and Wales.

An “Absence of Easement” indemnity policy can make the process much simpler. These policies are created to both indemnify the buyer against a third party challenging the right of way exists.

So, why should you take out an indemnity policy and how can it help?

What is an unadopted road?

A private or unadopted road is classed in Part XI of the Highways Act 1980 as any highway not maintained at public expense. In other words, it has not been adopted by the Highway Authority, so they do not maintain it and there are no public rights of way.

Roads such as these are particularly common in Cornwall and Devon. These roads are mostly seen in rural areas or areas with a high quantity of new builds.

Although the Department for Transport has not carried out a survey since 1972, it is thought that there are around 40,000 unadopted roads in England and Wales.

How can I establish a right of way?

As conveyancers, the first thing we’re looking to establish is if there is a right of way in the deeds.

If no such right of way exists, this could be resolved with a Statutory Declaration. These are sworn by the owner of the property, covering the continued use of the right of way for a minimum of 20 years. This establishes a right by long use or ‘prescription’.

Often, this isn’t possible as the seller has either not owned the property for that length of time or there are no earlier Declarations.

In that case, an Absence of Easement indemnity policy provides insurance in the event of the right of way being challenged.

What is an Absence of Easement indemnity policy?

An Absence of Easement indemnity policy provides insurance in the event of a challenge to the use of the right of way. This policy can then be transferred to the next homeowner.

Typically, to take out this type of policy, you need to confirm that:

• The property is a fully built, single residential dwelling being sold, purchased, or re-mortgaged, and the use will not change.
• The accessway being insured has remained unobstructed and used for more than eight months without payment, permission, or objection.
• There hasn’t been any contact with the owner of the access way regarding ownership or use of access.
• You are not aware of any proposed changes or diversions to the access way.
• The access way does not cross a registered village green.

It’s important to note that enquiries should not be made to establish the landowner or the right of way. Those actions may lead to the policy becoming null and void.

Who is responsible for the upkeep and maintenance of an unadopted road?

Establishing a right of way is the first step to the successful sale of property on private roads.

Mortgage lenders will be much more willing to lend if that question mark no longer hangs over the property.

However, there is still the outstanding issue of maintenance on the road which mortgage lenders will likely take issue with.

Of course, there are plenty of positives to living on an unadopted road. Often this will mean a level of peace, privacy, and security. But when potholes occur, or drainage is poor – who will organise and pay for repairs?

As conveyancers, we will also be looking for provisions in the deeds specifying arrangements for maintenance. Typically, the responsibility for the costs rests with the ‘frontagers’. These are the owners of the property that either front onto or adjoin the unadopted road.

Frontagers can enquire as to the Local Authority adopting the road if it’s becoming dangerous. However, bringing this road up to a standard the Local Authority are happy to proceed with, comes at a cost to the frontagers. Either way, for sellers and potential buyers, this is something to consider.

Why do I need a conveyancer?

Mortgage lenders are unlikely to lend without an indemnity policy or established right of way in place. So, you must contact a conveyancer and they will advise you whether you should take out a policy before putting your property on the market.

Consider also that once you have the indemnity policy in place, your focus will need to turn to the maintenance issue.

The Council of Mortgage Lender’s Handbook sets instructions for conveyancers acting on behalf of the lender in residential conveyancing transactions.

Under 6.8.1, a conveyancer must report if the roads serving the property are unadopted and therefore not maintained at public expense. This is if there is no agreement or bond (in the case of a new build) in existence.

Under 6.8.4 unadopted roads and sewers being maintained by residents or a management company is an acceptable lending circumstance. However, it needs to be within the conveyancer’s reasonable opinion that appropriate arrangements for maintenance repairs and costs are in place.

This is often where sellers run into problems. While maintenance should fall to the frontagers, that’s often not the case. Predominantly, there will be no provisions or money set aside for repair.

Sellers should work to establish some kind of maintenance agreement with the other frontagers. For buyers, it’s important to be aware of the fact the purchase of the property may incur road maintenance costs throughout the residency.

Coodes’ conveyancing services

Our team can help with arranging an indemnity policy to prepare your house for sale and a Statutory Declaration confirming your use to support the indemnity. If you’re a buyer, we can also help you to understand the legalities surrounding your new home.

Our property team aims to make the process as smooth as possible while keeping you informed and up to date. Allow us to also take the complexity out of selling through our straightforward and accessible advice and services.

For more information on either buying or selling property on unadopted roads, contact a member of our residential property team using our online form or give us a call on 0800 328 3282.