Newly built, substantially renovated or converted homes should have the benefit of a 10-year structural builder warranties. There are various warranty providers with differing levels of cover. They typically cover the cost of correcting any defects that may occur. Especially in respect of any structural elements within the building, such as the walls, foundations and roof structure.
Why is the Warranty important?
There are two main reasons:
Firstly, the obvious reason is that it provides insurance cover to pay for remedial works in the event that there are failures within the main structural elements of your home. This cover will continue even if the original builder were to go into liquidation. Unfortunately has been a common feature in recent times.
Secondly, if you are intent on obtaining a mortgage upon your property most lenders insist upon a 10-year structural warranty. They will require this in place. CML Handbook’s govern lending in conveyancing transactions, in order that they can be assured protection of their security going forward.
CRL – Alpha Backed Insurance Cover
There are a number of building warranty providers that were underwritten by a Danish insurance Company, Alpha Insurance, which collapsed and went into liquidation in May 2018. The most common Warranty provider affected by this in Northern Ireland is CRL. They had most of their policies underwritten by Alpha Insurance. As a result, the cover provided is no longer valid as no policy now exists. This is commonly seen in re-sale or re-mortgage of homes which have been built and completed within the ten-year period. As potential purchasers and mortgage companies are not satisfied to proceed without the warranty cover being in place.
The financial services compensation scheme were making efforts to try and obtain replacement cover. Unfortunately that has been unsuccessful to date. Those affected have been refunded by way of cheques. Any developers that had been using CRL as a Warranty provider have now needed to re-register their properties with a new Warranty provider.
The only option available is either to do nothing which may be fine if you are not intent on selling or re-mortgaging if they are content to take the risk on exposure to structural failings or to attempt to obtain replacement cover and there are a number of companies providing this replacement cover.
This would be in the form of ‘retrospective cover’. i.e. the insurer has not had the opportunity to check the build throughout the various stages of construction. Therefore it would be of significant importance to ascertain that any prospective purchaser or mortgage company would be satisfied with this.
At P A Duffy & Co Solicitors we can provide our clients with the appropriate advice in relation to these matters.