What is indemnity?
Land Registry may pay a sum of money as compensation for a financial loss someone suffers as a result of a mistake on the Land Register (the record of property ownership in England and Wales.)
Sometimes mistakes arise because the information which is received by Land Registry is wrong – for example there may be two properties whose deeds both include the same land in their ownership, which causes a duplicate registration. In such a case naturally only one of the owners will keep the land, so the other may be entitled to indemnity.
Indemnity has also been paid because of a fraud which has arisen in the course of a property transaction. The forgery of a deed of transfer (transferring a property to someone else), for example, gives rise to a mistake in the register, and if anyone suffers loss because of that, they may be entitled to indemnity.
Why is indemnity important?
The payment of indemnity is central to the operation of a reliable land registration system; a system which underpins the economy by securing the ownership of all registered land and property in England and Wales worth trillions of pounds.
The availability of indemnity provides the assurance to registered owners that if their own register (proof of ownership) should ever be subject to correction, they may be compensated if they suffer any loss as a result.
Who looks after indemnity in Land Registry?
Payment of indemnity is generally supervised and handled by Land Registry’s in-house lawyers, whose job it is to ensure that claims are met in accordance with the law.
Over the last three financial years annual indemnity payments have reduced from almost £12 million to under £8.4 million last year. Of the total paid during these years, roughly 57% relates to fraud, and the rest to other kinds of mistakes. However, new fraud claims received have actually decreased over the last three years, from 81 in 2012 to 56 in 2014.
Land Registry’s indemnity fund is covered by our income from fees and is not subsidised by the taxpayer.
Land Registry does all it can to detect and prevent registration fraud and since 2009 we have stopped the registration of fraudulent transactions against properties worth more than £74 million. However, no system can eradicate fraud completely which is why we have introduced several measures homeowners can take to reduce their risk from property fraud.
For more information about indemnity see our Practice Guide.