Mortgage Company conveyancing panel requirements re Outstanding Leasehold Interest Indemnity Insurance
Halifax and Barclays, in common with many lenders, dictate their own specific instructions when it comes to outstanding leasehold interest indemnity insurance. This page sets out to enlighten property law practitioners on the different lender solicitors panel where the title to be charged incorporates outstanding leasehold interest. Lawyers are advised to familiarise themselves with the CML handbook requirements for each bank, for example Santander, Lloyds TSB or Natwest. The information on this page Is not to be read as outstanding leasehold interest indemnity insurance advice.
Need help with outstanding leasehold interest indemnity insurance from your lender?
Birmingham Midshires and Skipton as with most mortgage companies, obligations require that where outstanding leasehold interest indemnity insurance is to be put on risk:
- your firm is duty bound to explain to the mortgagor that the borrower will need to comply with any conditions of the outstanding leasehold interest indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in respect of the insurance
- your practice must reveal to the insurer all relevant information which you have acquired
- you must send a copy of the outstanding leasehold interest indemnity insurance to the mortgagor and explain to the mortgagor why the outstanding leasehold interest indemnity insurance policy was effected and that a further policy might be necessary if there is further borrowing against the security of the property
- the outstanding leasehold interest indemnity insurance policy needs to be in favor of the bank and, if possible, in favour of the mortgagor and any future registered proprietor or lender. If the mortgagor will not be protected by the outstanding leasehold interest indemnity insurance policy, you must advise the mortgagor of this fact.
- the outstanding leasehold interest indemnity insurance policy must be placed on risk at no expense to the mortgage company
- your firm are responsible for approving the terms of the outstanding leasehold interest policy on behalf of the mortgage company
- the outstanding leasehold interest indemnity insurance policy must not incorporate terms which you know would void or prejudice the interests of the mortgage company
- the limit of indemnity must satisfy the requirements for the bank (See Part II Handbook requirements )
| Lender | Requirement |
|---|---|
| Atom Bank | At least the open market value of the property according to the valuation report. |
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Clydesdale Bank | Open market value of property. |
| Coventry Building Society | Minimum of the value of the property. |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| Hampden | The open market value of the property according to the valuation report. |
| Holmesdale Building Society | 110% |
| ITL Mortgages | Minimum of the value of the property. |
| Manchester Building Society | Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%. |
| Molo Finance Buy to Let | An amount at least equal to the amount of the mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgages. |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the advance. |
| NRAM Ltd | Preference for full market value of the property, but if this level of cover is not available, will accept a minimum of the actual loan amount. You must approve the policy on our behalf. |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| New Street Mortgages | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Paratus | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Perenna | The higher of the purchase price or valuation. |
| RBS (One Account) | An amount equal to the value of the property. |
| Topaz Finance | Valuation or purchase price, whichever is higher. The policy must always benefit the borrower and any subsequent owner or mortgagee - the policy must be index linked. |
Outstanding Leasehold Interest Contingency Insurance : Reflections
The full terms, conditions and exclusions for outstanding leasehold interest indemnity insurance are explained in the policy document. Conveyancing Practitioners are obliged to point the borrower to the outstanding leasehold interest indemnity insurance policy itself. The intention of outstanding leasehold interest indemnity insurance is to grant indemnity in respect of the risks specified in the policy schedule - so you should check the schedule to ensure it is as it should be. The lifetime of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.Important features and benefits of outstanding leasehold interest indemnity insurance :
Protection via such a policy is to cover the risk of third parties looking to enforce rights that can affect the use of a property. Outstanding Leasehold Interest indemnity insurance Policies should be checked for the following- Expenses for works (including professional fees) for the purpose of the development started, prior to proceedings for the enforcement of the risks specified in the outstanding leasehold interest policy, to the extent that such costs are rendered abortive by court order.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- The cost of altering or taking down all, or part of the development and the reinstatement of the land, insofar as such alteration, demolition or re-instatement is made necessary by court order.
- Market value reduction resulting from the successful enforcement of the risks specified in the outstanding leasehold interest indemnity insurance.
- Money paid with the written consent of the insurance company to liberate the land from the risks specified in the outstanding leasehold interest policy.
- Reimbursement for compensation incurred in any action concerning the risks specified in the outstanding leasehold interest indemnity insurance, including legal and associated costs.
Due diligence should extend to checking that the answers on the application form are correct. Regardless of how remote a claim on the bank insurance policy might be you can be sure that the insurer will check the details on any proposal form thoroughly prior to any claim being met.
Further considerations for outstanding leasehold interest indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from outstanding leasehold interest insurance may be adequate for your client. Information contained within this webpage is for general information for conveyancers and solicitors in England and Wales on the the lender solicitor panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the mortgage company indemnity insurance. Whilst we endeavour to keep the information up to date and correct we do not make any representation or warranties of any kind about its completeness, accuracy, reliability or suitability. Any reliance you place on the information is strictly at your own risk. Lexsure will not be liable for any direct or indirect loss or damage arising out of or in connection with the use of this information.
An important exclusion applying to most outstanding leasehold interest Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The above information covers to properties in England and Wales.