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Potential pitfalls

The majority of properties in the UK, particularly those in urban areas, are connected directly to public mains drainage. Those that are not, require the necessary legal easements to be able to install, use and maintain any pipes 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, or even a strip of land between the title boundary and the adopted highway. However, these legal rights are not always contained in the title to the property, or they may be inadequate in some way. For example, it’s not unusual for rights to be granted in relation to a specific use of the land, which is different to the current use. In these circumstances a property owner is at risk of a future dispute arising with the third-party landowner.

How can insurance help?

Where an established property 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. Alternatively, 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, and often statutory declarations or statements of truth from previous owners of the property may not comprehensively cover the required period. And even if the rights are thought to have been successfully acquired from the previous use, it does not negate the risk of a future dispute arising with the third-party landowner. 

In many cases though, the property may not even have been in existence for 20 years, so no prescriptive rights can be claimed. In addition, if extra burden is put on the services by changing the use of the land or adding new properties, then any rights accrued from the previous use, will cease and can no longer be claimed. 

Any attempt to approach the owner of the land under which the services run to try and acquire the legal easements required comes with an element of risk. The process can be time-consuming, costly, and there’s no guarantee that the required rights will be granted. It may even spark a legal dispute, which could delay the transaction, or potentially scupper it altogether. For these reasons, a legal indemnity policy is often the quickest way to resolve any title defects raised during the sale.

Assessing the risk 

Our underwriters deal with enquiries relating to drainage services on a daily basis, and the first key question they ask is whether the cover is required for an existing property. If this is the case, they 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. As a general rule of thumb, the longer the services have been used without any objection or dispute arising, the better. This information becomes particularly relevant should a claim arise, as it can help form the basis of any defence. 

Services cover can still be provided if the purchaser is planning to develop the land, or change the use of an existing property, but the risk of a claim is typically higher, because it involves a ‘new’ or possibly an increased use of the services. In these cases, our underwriters will consider the nature and size of the proposed development which will be using the services and will want to know if the services connection will be made within the site, or under the third-party land. If the works will be taking place on third-party land, we will want to establish if the ownership of that land is known. We’d also check whether planning permission has already been granted, and if any material objections or disputes were raised.

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.

Cover for 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 and use is prevented. 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 relating to the service installation. The service provider is also covered for any legal costs directly incurred as part of the dispute.

In good hands

With prescriptive rights taking so long to acquire, and with the changes that 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 Claims team provides often proves crucial - whether that’s defending the claim made against the Insured by outlining their prescriptive rights to use the services, or trying to obtain the necessary legal easement, or instead arranging an alternative supply or route for the services if the use is prevented.

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 our full range of policies and to get a quote online, take a look under the Services/Drainage heading on our products page. Call 01603 761515, or email us at enquiries@isisconveyancing.co.uk.