Lexsure e-ROT

Covenant Breach · Report on Title scenario

The seller is a bank and cannot confirm compliance with the covenants

Because the seller has never occupied the property and knows nothing about it. A lender selling after repossession is selling an asset, not a home they lived in, so the ordinary source of information about how a property has been used — the seller's own knowledge — is simply absent. Nobody is hiding anything. There is nobody to ask.

From the e-ROT archive

This scenario is drawn from Report on Title material dealing with this specific circumstance.

Lexsure master Report on Title paragraph: Potential Breaches - Repossessed Properties · See the wording

Which describes you?

I’ve already bought the property A breach has surfaced on a property I bought from a lender. Check what this could mean →WhenIBought.com I’m a conveyancer I need Report on Title wording for this situation. View professional options →

What is missing from the transaction

In an ordinary purchase a great deal rests on the seller's replies: what work has been done, what consents were obtained, whether anyone has ever complained, what the arrangements are with the neighbours. A repossessing lender can answer none of it.

The usual contractual protections are also commonly limited. Lender sale contracts are typically drafted to exclude the warranties a private seller gives, which is a commercial position rather than an unreasonable one — but it is a position you are accepting.

Already bought from a lender, and a breach has surfaced?

If something has come to light on a property bought after repossession, what was reported to you at the time is where the question starts.

Find out what should have been explained → WhenIBought.com

What the report can and cannot say

It can say that no breach is apparent from the documents, and that is a real statement based on real work: the title, the searches and whatever paperwork exists.

It cannot confirm compliance, because confirming compliance means knowing what has actually happened at the property. The Lexsure wording below draws that line explicitly, and the precision is worth noticing — “not aware of any breaches” is a different statement from “there are no breaches”.

How to narrow the gap

<b>Survey, and look specifically.</b> A surveyor can see what has been built, altered and extended. Comparing that with the title and the planning record is how you find breaches nobody has told you about.

<b>Search the planning record yourself.</b> It is public, and for a property that has been empty it may be the only history available.

<b>Consider indemnity cover for unknown breaches.</b> Policies exist for exactly this situation and are commonly used on repossession sales. They are the proportionate answer to a risk nobody can quantify.

<b>Price it.</b> The absence of information is part of why a repossessed property is cheaper, and treating it as free is the mistake to avoid.

From the e-ROT archive

Report on Title paragraph

Potential Breaches - Repossessed Properties

Master precedent Lexsure e-ROTScope No seller knowledgeWord count 82Status Current master paragraph

Based on the information available to us, we are not aware of any breaches of the restrictive covenants affecting the property. However, we are unable to confirm compliance. This is because the seller is a bank which has repossessed the property and therefore has no personal knowledge of the property’s past use or occupation. As a result, the seller is not in a position to provide assurances regarding historic compliance with the covenants, and our review is limited to the documents supplied.

Master precedent wording. This is current Lexsure Report on Title material, reproduced exactly. It is professional precedent wording addressed by a conveyancer to a client, and is not advice about any particular property.

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