The Gazette 1991

GAZETTE

NOVEMBER 1991

Loss of Deposit Cover The Conveyancing Committee is very pleased at the introduction by the NHBGS of loss of deposit cover on the insolvency of builders as an extension of the existing structural defects cover. Where a builder has this cover there should be no need to have deposits and stage pay- ments held by the builder solicitors' as stakeholders and subject to the limits of the scheme such money can be paid direct to the registered builder, his auctioneer or sales agent. The only foreseeable risk that can arise in this respect is that some agent might purport to take deposits on behalf of a builder without any authority. If the advice regarding the form HG41 set out in the last paragraph is followed we cannot see how this could happen. It must, however, be made quite clear that the only circumstances under which the NHGBS will guarantee the refund of this de- posit is by reason of the insolvency or fraud of the member and it is not the intention of the NHGBS to get involved in the type of arguments or disagreements which regularly arise between builders and purchasers on any other matters. The purchaser must satisfy the scheme that s/he has been unable (having used reason- ble endeavours) to obtain re- imbursement of the amount of the deposit by reason of the insolvency or fraud of the member. The NHGBS have assured us that in cases where their members are in liquidation or receivership there would be no question of pur- hasers having to take any legal proeedings. Even in cases where the position may not be as clear they have assured the Society that regard will be had to the needs of the purchaser to get a refund of the deposit (perhaps to buy an alternative property) and except in very unusual circum- stances they do not envisage having to ask the purchaser to obtain a judgment or take any legal proceedings before dealing with the claim.

builder or any reputable source should be sufficient. The important thing is that the registration of the house for deposit cover has taken place. Conveyancing Committee Hotel Licences Further to the practice note which was published in the July/August edition of the Gazette, the Conveyancing Committee wish to draw attention to the fact that all relevant searches should be carried out prior to contract and in the event that the District Court register contains i nsu f f i c i ent information, a further search should be carried out on the Circuit Court file. Conveyancing Committee • Viewpoint Why not Solicitor Judges? (Cont'd from p. 299) selection for the Bench. In a small jurisdiction there will always be a difficulty about achieving an ob- jective assessment of candidates who necessarily will be known personally by any likely selectors. In such a system it seems even more important that the qualities of pros- pective appointees to the bench, particularly where such appoint- ments are not initially of a temporary nature, should be as- certained before a permanent appointment is made. With increasing specialisation among practitioners it is important that where persons are to be appointed as judges of general and wide jurisdiction, that they are given an opportunity in training programmes, some of wh i ch should be completed prior to their appointment, to familiarise them- selves with areas of jurisdiction in which they have not regularly practised.

The time limit on the cover in any case is two years from the date of registration of the building or one year from the date of issue of the HG41 (whichever is the later) unless the purchaser requests an extension of time. Any such extension of time will be given for the asking and will extend the date of the cover for a period of 6 months from the original date of expiry. The NHBGS have a new document called HG41 which verifies the deposit cover in any particular case. There is a limitation of £20,000 or 15% of the purchase price which ever is the lesser in any case. This deposit cover will cover stage payments provided they are within the limits and rules. Solicitors should make sure that their clients are aware of the rules and that it is up to the client to monitor the time limit and to seek assistance if the construction of the house does not seem to be proceeding and time seems to be running out. Even if the deposit is covered by the NHGBS scheme, instruction should be obtained from the client to pay over the deposit to the builder. Solicitors should draw clients' attention to the rules in relation to the deposit by sending them details of the cover. The limits of £20,000 or 15% of the purchase price are important. It is particularly import- ant, when paying a deposit to a selling agent, to establish the identity of the registered member of the NHBGS on whose behalf the agent is acting. The most important point of all is to make sure that the deposit cover applies in any case. Membership of the NHBGS or the registration of a house for the usual six year structural defects warranty f rom the NHBGS does not automatically entitle a purchaser from a registered builder/developer to deposit cover. Sight of the original HG41 is advisable if you are paying the deposit to anyone other than the builder/developer or their solicitor. It is not essential for the purchaser to get possession of the original HG41 and a copy from the

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