intouch

When a legal dispute arises over a connection to existing drainage services, or where a new connection is being made which lacks the required legal easement, it can be incredibly disruptive, whether it’s to a homeowner or to a developer. It is also time-consuming to resolve, and potentially costly. 

Out of sight, out of mind 

Where a property is not connected directly to public mains drainage, it will require the necessary legal easements to use any sections of pipes or cables that run through land owned by a third-party before reaching the mains. This land could form part of a neighbouring property, a private access road/path, or even a strip of land between the title boundary and the adopted highway. But these legal rights are not always contained in the title to the property, or they may be inadequate in some way (for example, the rights were granted in relation to a specific use of the land which is different to the current use), and in these circumstances a property owner is at risk of a future dispute arising with the third-party landowner.

Why choose insurance?

Where there is an established property that has enjoyed uninterrupted use of the services for at least the last 20 years, without permission or payment, the buyer’s and seller’s solicitors may feel that prescriptive rights have been acquired. Or they may seek to rely on the principle of lost modern grant, where it’s presumed that an easement must have been granted at some point in the past, based on at least 20-years’ use. 

In either case, strong documentary evidence is required to rely on those rights, and it still does not negate the risk of a future dispute arising with the third-party landowner. In addition, if extra burden is put on the services by changing the use of the land or building new properties, then those rights cease and can no longer be claimed. And of course, the property may not have been in existence for 20 years, while statutory declarations or statements of truth from previous owners of the property may not cover the required period either.

For these reasons, a legal indemnity policy is often the quickest way to resolve any title defects raised during the sale, rather than attempt to approach the owner of the land under which the services run (if they are known) to try and acquire the legal easements required. Such a process can be time-consuming, costly, and there’s no guarantee that the required rights will be granted, which could delay the transaction and chain as a whole, or potentially scupper it altogether.

An insurunce solution 

So, given the nature of what’s involved, how do our underwriters approach an enquiry? From a practical perspective, the first key question is whether cover is required for an existing property. If this is the case, our underwriters will want to confirm the property is connected to the mains drainage, and that the services have been used for at least the last six months without any disputes or payments. In general, the longer the services have been used without any objection or dispute arising the better, and if a claim arises then this can help form the basis of any defence. 

If the purchaser is planning to develop the land, or change the use of an existing property, Services cover can still be provided, but the risk of a claim is typically higher because it involves a ‘new’ or increased use of the services. In these cases, we will need to consider the nature and size of the proposed development which will be using the services. For example, if there are plans in place to construct a new student accommodation block, we will want to know if the services connection will be made within the site, or if installation works will be taking place on third-party land, and whether or not the ownership of the land containing the services is known. We’d also want to know whether planning permission has already been granted, and if any objections or disputes were raised relating to the application.

Finally, in all cases our underwriters will check whether there has been any contact with the owners of the land that the services run through. It is important to establish this in order to avoid becoming involved in a pending or existing dispute, as a legal indemnity policy is obtained as an alternative to trying to rectify the legal defect with the relevant third parties.

The protection of a policy

Our policy covers buyers and their lenders against the initial costs of defending any claim received from the third-party landowners through which the services run, including any legal proceedings or costs involved in complying with an injunction. If these arguments do not resolve the situation, the policy will cover the cost of obtaining a legal easement for use of the services, or the provision of an alternative route for the services. In a worst-case scenario, we will also cover any reduction in market value of the property if use of the services is permanently prevented, and any abortive costs and contractual penalties if any planned development of the property can no longer go ahead.

Service providers

When we are approached with an enquiry related to a development site, we typically extend cover to include the utility services provider who is installing the services, most commonly gas, electricity and telecommunications companies. These providers could see their works disrupted or even prevented entirely if a legal dispute arises. Our policy covers the cost of dismantling and relocating the services, plus any costs for reinstating the surface of the land to its former condition, and any abortive or contractual costs or liabilities relating to the service installation. 

Supporting your clients

It’s perhaps not surprising that, as prescriptive rights take so long to acquire, and with the changes which naturally take place over time to different properties or areas of land, disputes leading to claims on our Services policies crop up all too often. In these situations, the expert advice and support our team provides often proves crucial, whether that’s seeking to claim prescriptive rights to use the services, trying to obtain the necessary legal easement, or arranging an alternative supply or route for the services. This is perfectly demonstrated in the case study in this edition of intouch, where the private water supply that a residential property had been using for 40 years was cut off, and there was no clear cost-effective solution.

We also have a Services policy option available for properties that are connected to a septic tank rather than a mains supply, and a combined Access and Services policy. To see the full range of policies and to get a quote online, take a look under the Services/Drainage heading on our products page. Call 01603 617617 to speak to an underwriter, or email enquiries@cli.co.uk.