Hostile actions in property transaction

[GoSeigen]

Quick question: in a commercial property transaction, where a commercial property is bought from a company [as opposed to the company itself being purchased], is it usual for the property purchaser to obtain indemnities from the selling company against the actions of disgruntled former employees, shareholders etc? One would not want the property you'd bought to be burned down by an employee who had been sacked, for example, or to be harassed by a minority shareholder who had opposed the sale.


GS

[sg31]

Wouldn't this be covered under the standard property insurance cover?

[dspp]

Quick question: in a commercial property transaction, where a commercial property is bought from a company [as opposed to the company itself being purchased], is it usual for the property purchaser to obtain indemnities from the selling company against the actions of disgruntled former employees, shareholders etc? One would not want the property you'd bought to be burned down by an employee who had been sacked, for example, or to be harassed by a minority shareholder who had opposed the sale.


GS

No.

[Grumpsimus]

Quick question: in a commercial property transaction, where a commercial property is bought from a company [as opposed to the company itself being purchased], is it usual for the property purchaser to obtain indemnities from the selling company against the actions of disgruntled former employees, shareholders etc? One would not want the property you'd bought to be burned down by an employee who had been sacked, for example, or to be harassed by a minority shareholder who had opposed the sale.


GS

I am a retired surveyor who has dealt with many commercial property transactions often of very large properties. I have never heard of any purchaser requesting this type of indemnity. What would it achieve? Arson by a disgruntled former employee would be a criminal offence. Harassment by a minority shareholder could also be a criminal offence.

All that is required is to ensure that the seller has good title to the property and the transfer is properly registered at the Land Registry. The is what Solicitors do all the time. The seller is unlikely to have any control over former employees or a minority shareholder.

[Lootman]

Quick question: in a commercial property transaction, where a commercial property is bought from a company [as opposed to the company itself being purchased], is it usual for the property purchaser to obtain indemnities from the selling company against the actions of disgruntled former employees, shareholders etc? One would not want the property you'd bought to be burned down by an employee who had been sacked, for example, or to be harassed by a minority shareholder who had opposed the sale.

I am a retired surveyor who has dealt with many commercial property transactions often of very large properties. I have never heard of any purchaser requesting this type of indemnity.

There are certainly indemnities requested by buyers and granted by sellers with residential properties, so I'm not sure why commercial properties would be any different. The last property I sold came with three such indemnities requested by the buyer. One was for a chancel precept and I cannot recall what the other two were for.

In each case I didn't actually offer indemnity personally but rather gave the buyer a credit equal to the cost of that buyer purchasing an indemnity insurance policy. There was no way I was going to be perpetually on the hook for such liabilities so the insurance/credit approach seemed the best way to handle it.

Of course I could just have refused to offer this, and then the buyer would either have bought his own insurance or pulled out of the deal. But it didn't amount to a lot of money for the insurance so I was happy to grant that.

[GoSeigen]

Thanks all. Will not bother with this then and make sure insurance and sale process minimises our risk instead.

I may have other stupid questions later


GS

[stewamax]

One was for a chancel precept

I can sympathise with this particular one. Even if the PCC hasn't actually sent a bill for chancel repairs (and I imagine this is an unusual occurrence) but just registered the precept, the very existence of the registration can devalue a house, particularly if the liability is 'joint and several' and the owners of the other houses affected can't or won't pay.

[Clitheroekid]

Quick question: in a commercial property transaction, where a commercial property is bought from a company [as opposed to the company itself being purchased], is it usual for the property purchaser to obtain indemnities from the selling company against the actions of disgruntled former employees, shareholders etc?

Definitely not. In over 35 years of dealing with commercial property sales and purchases I have never come across even the suggestion of such an indemnity.

There are certainly indemnities requested by buyers and granted by sellers with residential properties, so I'm not sure why commercial properties would be any different.

What you're referring to is title defect indemnities, which are commonplace. For example a property may be affected by restrictive covenants that can't be identified because the deed's been lost; or it may be a leasehold property where the freeholder can't be traced; or perhaps, as in your case, there's a risk of chancel repair liability.

In all such cases there is a risk, however remote, that litigation might arise.

Of course, as you point out, no seller would want to offer an indemnity against such a risk and be on the hook indefinitely, hence the ubiquity of title indemnity policies.

But these are well known, frequent and highly predictable situations where it's easy for insurers to assess the risk. The sort of incident mentioned by the OP is anything but, and no selling company would want to act as insurer against such incidents. And because of the difficulty of assessing the risks I doubt any insurer would be willing to offer cover, or at least not at an affordable rate.