With an intact chain of indemnity covenants, what is advisable when the seller's buyer subsequently sells on?

• A. The covenants should be extended to all future owners automatically
• B. The chain can be ignored, as it has no effect
• C. The buyer should seek to obtain indemnity covenants from his successor
• D. The buyer should remove indemnity covenants to simplify

Answer: (C)

With an intact chain of indemnity covenants, the protection against title risks is designed to flow from one owner to the next. When the seller’s buyer sells on, the best practice is to have the next owner enter into an indemnity covenant. That keeps the chain alive: if a claim arises because of a defect that predates the current owner, the successor will indemnify the previous owner, preserving the overall protection down the line.

Extending covenants to all future owners automatically isn’t how these arrangements normally work, and trying to ignore or remove the covenants would weaken or break the protection. So, securing an indemnity covenant from the successor maintains the continuity of cover.