CASE STUDY: Our Perfect Title Policy protects our clients if their property's land value plummets, leading to unexpected costs
Posted by: Westcor International


CASE STUDY: Our lender client was protected under our Perfect Title Policy when the developed value of the land plummeted from over £260K, due to an unknown underground pipe, owned by the Water Authority. 


What triggered the claim?


Mr H approached the Lender for a loan allowing him to develop a plot of land for which planning permission had been granted a few years prior. The planning permission was for a two-bedroom detached dwelling and the plot of land had already been cleared meaning work could start immediately.


Whilst Mr H was excavating his new build, he discovered a pipe that ran through the plot of land which was a public surface water culvert, owned by the Water Authority. Mr H intended to repay the loan by selling the developed property, however, this discovery threw quite a spanner in the works.


So, what next?


Naturally, Mr H’s first port of call was to contact the Authority to try and obtain ‘build-over’ permission to enable the dwelling to be constructed. It was confirmed that the pipe was critical to the water network and therefore the access could not be interrupted. It was advised that the only way they would grant permission would be if the pipe were rerouted.


Following this, a surveyor was instructed to determine whether the planning permission could be altered to avoid the pipe, however, it was not possible to construct anything of value given its location.


It became apparent that not only would we be unable to get the necessary ‘build-over’ permission, but that the site value would now plummet.


What was the outcome?


Due to the unfortunate impossibility of re-routing the pipe and given the result would cost significantly more than the development would be worth when completed, our only option was to sell the property at auction for a much smaller sum of £28K. The lender was paid the remaining shortfall under the terms of the policy.


Under our rights of subrogation, we have successfully pursued the third-party solicitors for the shortfall and have almost made a full recovery.

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