Since the COVID pandemic began the processing of local searches by local authorities has slowed considerably and, in some cases, has ground to a halt.
An alternative to a full local search result is the availability of indemnity insurance but most lenders will only accept indemnity insurance on re-mortgage cases. However, due to the delays that are being experienced, some lenders are changing their policies and will allow indemnity policies to be taken out on purchases as well provided:
- The title is good and marketable
- The lender is fully protected
- The client is aware of the risks of proceeding without the result of a local search
The risk to buyers is that they will be buying without the benefit of seeing a full local search result and will not be aware of any adverse entries that might otherwise be revealed. Whilst the indemnity insurance may provide insurance cover, it will not take away the inconvenience and hassle that an adverse entry may bring and could hinder any future sale until the issue has been resolved.
It is possible that the relaxation of the rules may be time limited but if the vast majority of mortgage lenders adopt this approach, it will certainly free up some log jams that are currently occurring in the property market.