Lender conveyancing panel conditions re Local Search Indemnity Insurance
Godiva Mortgages and Yorkshire Building Society, in common with most banks, set their own requirements when it comes to local search indemnity insurance. This page sets out to enlighten property law solicitors on the different mortgage company solicitors panel where the title to be charged includes local search. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each mortgage company, whether it be Leeds Building Society, Skipton or Natwest. The content on this page Is not to be read as local search indemnity insurance advice.
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Coventry BS and Bank of Scotland like many banks, requirements are that where local search indemnity insurance is to be put on risk:
- the local search indemnity insurance policy must be in favor of the lender and, if possible, in favour of the borrower and any subsequent registered proprietor or lender. Where the borrower will not be covered by the local search indemnity insurance policy, you must advise the borrower of this fact.
- your firm must approve the terms of the local search policy on behalf of the mortgage company
- your firm must reveal to the insurer all relevant information which you have obtained
- your practice must provide a copy of the local search indemnity insurance to the mortgagor and explain to the borrower why the local search indemnity insurance policy was effected and that a further policy might be required if there is supplemental borrowing against the security of the property
- the local search indemnity insurance policy should be effected at no cost to the bank
- the limit of indemnity must satisfy the requirements for the mortgage company (See Part II Handbook requirements )
- the local search indemnity insurance policy should not contain conditions which you recognise would void or prejudice the interests of the bank
- your practice must point out to the borrower that the borrower is obliged to comply with any conditions of the local search indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in relation to the insurance
| Lender | Requirement |
|---|---|
| Accord 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 mortgagee. |
| Accord Mortgages | 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 mortgagee. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Britannia | Cover to the full value of the property. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Cynergy Bank | The market value of the property. |
| Family Building Society | An amount at least equal to the mortgage advance. |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| GE Money | GE Money Home Lending has withdrawn from the UK mortgage market. |
| Hinckley and Rugby | The policy must be for our benefit and for no less than the amount lent to the borrower, including retentions, stage payments and interest. |
| Landmark | 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. |
| Leeds Building Society | An amount at least equal to the amount of the mortgage advance plus 10%. Any indemnity insurance policy must protect the borrowers, any successor in title and any Mortgagee. |
| Magellan Homeloans | At least equal to the value of the property |
| 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. |
| Mortgage Express | Amount of loan + 15% |
| National Westminster Bank | An amount equal to the value of the property. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
General Local Search indemnity insurance points to consider
The full terms, conditions and exclusions for local search indemnity insurance are identified in the policy paperwork. Conveyancing Practitioners should direct the borrower to the local search indemnity insurance policy itself. The intention of local search indemnity insurance is to grant indemnity in respect of the risks specified in the policy schedule - so you should check any draft to determine that it is in order. The continuance of this non-investment insurance contract is in perpetuity unless otherwise stated in the local search indemnity insurance policy. Again, please check that this is as you expected.Local Search Contingency insurance: Important features and benefits:
This policy would usually provide protection from financial loss that might arise in the event of a third party making a cliam in respect of the risks identified in the policy document. Local Search indemnity insurance Policies should be checked for the following- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Cover for compensation incurred in any action regarding the risks specified in the local search indemnity insurance, as well as solicitors charges.
- All sums paid with the written consent of the insurance company to liberate the property from the risks specified in the local search insurance.
- Loss in market value due to the successful enforcement of the risks specified in the local search insurance.
- The out of pocket expenses 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.
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, before the commencement of proceedings for the enforcement of the risks specified in the local search policy, to the extent that such costs are rendered abortive by court order.
Always consider what is not included in the local search indemnity insurance e.g. does the policy cover any property that has been altered within the year prior to the policy being put on risk? Does it cover legal costs?
Local Search Indemnity Insurance has limitations - Additional considerations
There may be consequences arising from the enforcement of the risks identified in the local search policy which are not adequately covered by financial compensation. Content on this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company approved 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 local search 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.