PROPERTY DEVELOPMENT

SOLUTIONS

UK SITES

Legal Indemnities and Property Contingency Solutions enable developers and their funders to price risk and devise risk management strategies that are backed by insurance not replaced by insurance.

 
CLS’s panel of carriers enables us to insure sums of up to GBP 270 million of AA- and A rated paper. Additional capacity is drawn upon for larger cases.
See ERGO, AEGIS and AMTRUST for their current financial standing.
Specific risks include rights of light, restrictive covenants, planning rules to public tender rules, easements, unexplored ordnances and many more for projects in the UK and throughout Europe.
Change creates risk and property law and contracts are rarely black and white. We are specialists in creating Property Contingency Solutions to help developers price contingencies created by the interpretation of property law and property contracts.
Our Legal Indemnities and Property Contingency Solutions are our unique hybrid of legal indemnity and pure contingency insurance products. The products provide solutions for developers or buyers that deal with adverse interpretation of title-related matters, land law or legislation more generally. This allows the creation of an appropriate risk management strategy that is backed by insurance instead of being replaced by insurance. Developers and funders appreciate our approach and frequently request our “Agreed Conduct” structure enabling the insured and their advisers to retain control and mitigate risk within defined parameters.
Heads of loss include legal costs to defend and settle a challenge by a third party, costs and damages awarded against an insured, settlement costs, loss in market value or loss to the funder and various delay costs and exposures to incoming tenants in the event a practical completion is delayed or unachievable.
We do not overcomplicate routine matters. Once a risk has been identified to us, we will review and confirm cover on clear and uncomplicated policy forms. Any subjectivities will be clearly expressed and are typically formed of “Statements of Fact” required to be confirmed by seller or buyer.
When a project presents a unique risk (whether by type of context) we are proactive in our engagement with clients to ensure we understand the risk in their context. We routinely engage with your legal team to adapt our policy forms to ensure that your demands and needs are satisfied.
Quotations on routine matters - 24 hours. We specialise in addressing complex enquiries and endeavour to provide an indicative view on these within 48 hours (depending on complexity). With the largest team of commercial underwriters in this sector in London and unrivalled IT we are always able to work to your deadlines. Subject to complexity, a fixed fee may be payable to cover costs of data incurred by CLS.
Using CLS’s panel of insurers, we are able to insure in the UK & Europe. We focus on England and Wales, France, Germany and Benelux currently.
CASE CONTEXT
A developer's surveyor’s advice indicated a proposed scheme could create a level of interference to light which might entitle the owner of neighbouring commercial premises to obtain an injunction. Due to proximity, the developer would also need to discuss party wall matters and scaffold licences with the owner of a neighbouring property. Whilst the developer's intention was to pre-empt matters and request a deed of release in return for compensation, some litigation risk remained should the owner attempt to preserve their rights to light, whether as a negotiating position in return for higher compensation or for more legitimate reasons. The developer's primary concern was that a protracted negotiation might create uncertainty and delay, which might deter funders or potential incoming tenants.
SOLUTION
We created a solution which embraced the developer's intention to address the potential interference within the spirit of recent legal judgments and commentary. Using unique policy terms combined with an excess, the developer was able to price and control his own exposure (as well as manage neighbourly matters) safe in the knowledge that an insurance policy provided protection should the doomsday scenario of an injunction arise. Calling on our risk management expertise following the issue of the policy, the developer was able to progress a commercial dialogue whilst operating within agreed conduct policy conditions.
CASE CONTEXT
A supermarket chain intended to enter an agreement for a lease of a new unit within an existing building, but the required the relocation of a stairwell serving residential units above. There was a risk that a relocation of the stairwell could constitute a nuisance in relation to tenants. If an injunction was issued it could cause the supermarket to incur losses beyond those indemnified by the landlord in the agreement for the lease.
SOLUTION
We created a policy which included a range of consequential losses exposures facing the supermarket, including loss of profit and rent liability in the event the retail premises could not be sublet. The solution alleviated the supermarket's concerns and facilitated completion of the agreement for lease and fit-out in time to ensure opening of the new store on schedule.
CASE CONTEXT
An operator intending to use recyclable materials to fuel a new generation of power station hit upon a complication and it proved impossible to evidence ownership of an easement in relation to the route of a private rail line which had historically served the property. Rail access was vital to the viability of the power station and central to the operator’s ethos of clean and sustainable energy starting with the supply chain.
SOLUTION
We undertook a Due Diligence Assistance Report. As a result of the data analysed, we provided an insured solution that protected the operator's use of the rail line, included cover for additional transport costs in the event of a claim and provided for the operator’s right to approach the Land Registry post inception to formalise and protect their claim to ownership of the legal easement. This was a condition of the draw-down of the bulk of the project loan and was critical from the operator’s funder's perspective.
Our solution helped combine a funders’ strict lending requirements with the realities of tendering and the rigidity of Land Registry processes enabling the parties to renegotiate the sale price in a manner that maintained viability for both parties.
CASE CONTEXT
A developer's site in London was located within an area in which compulsory purchase powers had been authorised to facilitate delivery of HS2 and various associated regeneration plans. There was no provision in the statute recognising and protecting extant planning permissions and this uncertainty was delaying agreement of a finance package for the developer.
SOLUTION
Drawing on knowledge of compulsory purchase procedures, an in-depth review of the HS2 project and a pragmatic view on probability, we created an insurance solution to satisfy the wide-ranging demands of a body of international funders which covered a shortfall in recovered funds (via statutory compensation) in the event of a Compulsory Purchase Order which curtailed the borrower's proposed development.
CASE CONTEXT
Unexploded ordnances, a legacy of WW2, pose a financial risk to developers of exceptional remediation and delay costs. Combining expertly compiled historical data and engineering expertise we created an insured solution that enabled a developer to budget for realistic exposures in the event an unexploded ordnance was discovered during ground works.
SOLUTION
We created an insurance solution for protection against “excess” costs and unforeseen financial contingencies arising from the development of a site close to the rail network and previously on the Luftwaffe’s flight path over London!
CASE CONTEXT
A developer intended to transform an unused office block into residential apartments using the rights afforded under the temporary General Permitted Development Order 2015. There was some ambiguity as to the scope of these rights which made funding hard to secure. A supportive legal opinion was provided in an attempt to address the concerns as to the remit of the legislation and insurance was required to satisfy the primary lender and also the lenders of any future plot buyers.
SOLUTION
An insurance solution was tailored which allowed the developer to secure funding in order to continue with their conversion. This solution also meant that the developer could start selling ‘off-plan’ as cover was extended to any future plot buyer should an enforcement notice be received in respect of the ‘lawfulness’ of the permitted works.