Latent Defects Insurance

Latent Defects Insurance (LDI) is being offered by some developers in the purchase of new apartments, in place of HomeBond or other protection against building defects. It is not the role of the Conveyancing Committee or conveyancing solicitors to compare the advantages or disadvantages of one insurance product as against another.

In general, and provided that the purchaser is satisfied that the LDI Policy provides adequate protection against building defects, an LDI policy is an acceptable alternative to HomeBond or other similar insurance product. However, as LDI policies typically do not provide any deposit protection, alternative arrangements to protect the purchaser’s deposit pending completion ought to be in place.

The Law Society’s Residential Mortgage Lending Certificate of Title System does not require that HomeBond or a comparable alternative be in place. It is the view of the Conveyancing Committee that solicitors do not need to qualify certificates of title in circumstances where an LDI policy is being offered in lieu of HomeBond. However, where it is a condition of a loan offer that HomeBond be in place, the purchaser ought to confirm with the lender that the Lender is prepared to accept the LDI policy.