In the world of property transactions, not every deal concludes successfully. People occasionally change their minds, unsettling survey results can emerge, or someone else might swoop in with a higher offer and claim the property you had your eye on. Let’s explore whether Residential Abortive Transaction Insurance (RATI) is a worthwhile investment in such situations.

The Reality of Property Transactions

Until contracts are exchanged, nothing is guaranteed in the property-buying process. Significant work must be completed before reaching this point, involving various professionals whose services require payment regardless of the outcome.

When a sale or purchase falls through, which does happen from time to time, you may still be responsible for several costs. Fees for conveyancing, fees for searches, mortgage setup, and surveys are often non-refundable, potentially leaving you out of pocket by hundreds or even thousands of pounds without the property to show for it.

Can Anything Be Done?

The answer is both yes and no. Residential Abortive Transaction Insurance (RATI), sometimes referred to as homebuyer protection insurance or similar terms, is one option.

This type of insurance can be taken out at the start of a property transaction and typically provides up to £1,500 in cover for costs associated with conveyancing. Policies generally cost around £50 or more, depending on the cover and provider.

The Drawbacks

Despite its potential appeal, we generally don’t recommend RATI to clients. While it might be helpful in certain situations, those scenarios are relatively uncommon.

As with most insurance products, RATI policies come with strict terms and conditions. They don’t provide blanket cover for every failed transaction. Instead, the circumstances under which you’re protected are narrowly defined.

For instance, the policy might cover your expenses if you’re forced to withdraw from a purchase due to redundancy. However, it may not apply if you voluntarily accept redundancy or were aware of the possibility when taking out the policy.

Similarly, the insurance might cover costs if the seller unexpectedly decides not to proceed because of a serious personal accident. But if they pull out due to a family emergency or change of heart, the policy might not offer any compensation.

Should You Consider It?

Ultimately, the decision to purchase RATI depends on your circumstances and risk tolerance. Our advice is to thoroughly review the terms and conditions before committing to any policy. Many of these insurance offerings appear more like marketing tactics than true safety nets. It’s essential to fully understand what you’re paying for to ensure it aligns with your needs and expectations.

Written by Megan Wood – Property & Litigation Solicitor

If you have any questions relating to the above article please do not hesitate to contact us, our team of expert solicitors are on hand to help.