Indemnity covenants in property transfers


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Property expert
Practice notes

Indemnity covenants in property transfers


Published by a ÀÏ˾»úÎçÒ¹¸£Àû Property expert

Practice notes
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This Practice Note looks at when an indemnity Covenant should be given in a transfer of land.

What is an indemnity?

An indemnity is a primary obligation and is an Agreement by one party to Bear the cost of certain losses or liabilities suffered by another party in certain circumstances.

Transfers of land often contain a covenant by the buyer to indemnify the seller against any losses suffered as a result of a breach of covenant by the buyer.

When is an indemnity covenant needed in a transfer?

A transfer should include an indemnity covenant where, following completion, the seller will remain liable, or potentially liable, under covenants affecting the property.

There are various situations where this might be the case.

Property is subject to covenants

A person who enters into a covenant regarding land will, when they come to sell the land, almost certainly require an indemnity from their purchaser in respect of that covenant. The purchaser and each successive owner of the land will then require a similar indemnity every time the property is transferred.

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Jurisdiction(s):
United Kingdom
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Key definition:
Covenant definition
What does Covenant mean?

(1) legal safeguard put in place to protect bondholder's interests

(2) underlying promise of the employer to pay contributions to a pension scheme

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