Construction
As available space in city centre locations is now at a premium, the need to maximise the development potential of this land leads to the construction of taller buildings in more and more confined areas. Such development has inevitable consequences on adjoining properties, particularly in relation to the amount of light that they will continue to receive and there is no certainty that they will be able to complete the development if a third party seeks to enforce their rights of light.
First Title has developed Rights of light insurance in the UK as a response to requests from its client-base (developers and funders) to provide coverage to reflect a shift in the legal landscape and, in particular, the use of private rights by third parties to influence land use and/or obtain financial settlements. This insurance insures loss caused because a development infringes someone else's legal right to light for their land. We would be happy to explore similar coverage for other markets around the world where we operate.
The typical profile of an insurable risk is a project that has been designed to maximise development potential and minimise interference but where a surveyor has been unable to eliminate all risk associated with prescriptive rights of light that have accrued to neighbouring properties (or, where to do so, would render a project uneconomic).
The proper application of insurance should enable a developer to balance the requirements of good conduct (as advocated by the Courts) with an viable rights of light strategy, in other words, accommodating the interests of genuinely affected third parties without incurring cost from dealing with parties whose motivation is purely financial.
Insurance supplements (rather than replaces) the expert surveyor's input by enabling a appropriate rights of light strategy and transfer the residual financial risk to the insurer's balance sheet. The extent of coverage will vary from insurer to insurer. Our own policies provide two forms of protection: firstly, we will pay all legal costs involved in addressing claims against our insured developer, at our own cost; secondly, we will typically insure any combination of the cost of any settlements, damages award, abortive costs or additional project costs incurred as a result of a third party claim or loss in land value in the event the developer's desired project is permanently halted by the Court.
Most insurers would expect to use expert surveyors in two capacities: initially, in conjunction with the developer, to assess the extent of interference with third parties' rights and to assist in devising an appropriate rights of light strategy; secondly, in a claims management role, to address claims made against the insured developer and assist in negotiations of settlement or resultant legal action.
What we require
- A copy of the deed reserving the rights of light or such details that are available e.g. office copy entries (if applicable)
- Plans and elevations of the proposed development
- Photographs of the surrounding properties and any building currently constructed on the land
- Rights of Light survey