When a new home is built, a buyer can expect the developer to provide a new build warranty. This is a 10-year insurance policy, which protects buyers against structural defects. It is a condition of most mortgages that a newly built or converted property has the protection of such a policy.
The most well known cover is the National House Building Council (NHBC). However, there are others, including policies issued by CRL.
The new build warranty is valid for 10 years – so the benefit of it will be passed on to anyone who buys the property within that period.
Buyers of property with existing CRL policies in place need to take care because the underwriter of these policies has gone bankrupt. This means that many existing policies issued by CRL are invalid.
Many existing homeowners will have protection from the Financial Services Compensation Scheme in the event of financial loss. However, this cover will not extend to subsequent owners of the property. In addition, small developers or those who have built their own house will not be protected.
It is important for a buyer to ensure that any existing CRL policy that is being offered by the seller of a property is valid. In some cases, sellers have been forced to buy new policies at considerable cost to avoid losing a sale. This can be important for a buyer who needs a mortgage because some lenders will not accept retrospective view build policies.
Buyers should take advice from a specialist property lawyer when buying their house.
To discuss this or any other property related issue, contact us.