Indemnity Insurance of Possessory Title Mortgage Company conveyancing obligations
Barclays and Accord, as with most mortgage companies, have their own requirements when it comes to possessory title indemnity insurance. This page is designed to help conveyancing firms on the different mortgage company conveyancing panel where the title for the the property to be mortgaged contains possessory title. It is not a alternative for checking the CML handbook requirements for each bank, whether it be Skipton, Lloyds TSB or Santander. The information on this page Is not to be read as possessory title indemnity insurance advice.
Need help with possessory title indemnity insurance from your lender?
Halifax and Barnsley BS like most lenders, requirements are that where possessory title indemnity insurance is to be put on risk:
- the limit of indemnity must meet the requirements for the lender (See Part II Handbook requirements )
- the possessory title indemnity insurance policy must be in favor of the bank and, if possible, for the benefit of the borrower and any subsequent registered proprietor or mortgagee. If the borrower will not be protected by the possessory title indemnity insurance policy, you must advise the borrower of this fact.
- your firm must approve the terms of the possessory title policy on behalf of the lender
- the possessory title indemnity insurance policy should be placed on risk without charge to the mortgage company
- your firm must reveal to the insurer all relevant information which you have obtained
- the possessory title indemnity insurance policy must not contain conditions which you recognise would invalidate or prejudice the interests of the mortgage company
- your firm is duty bound to explain to the mortgagor that the borrower must adhere to any conditions of the possessory title indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in relation to the insurance
- you must send a copy of the possessory title indemnity insurance to the mortgagor and explain to the mortgagor why the possessory title indemnity insurance policy was effected and that a further policy could be required if there is supplemental borrowing against the security of the property
| Lender | Requirement |
|---|---|
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Ecology Building Society | An amount equal to at least 110% of the mortgage advance |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| GE Money | GE Money Home Lending has withdrawn from the UK mortgage market. |
| Generation Home | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| Halifax | An amount at least equal to the mortgage advance. |
| Hampden | The open market value of the property according to the valuation report. |
| 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. |
| Intelligent Finance | An amount at least equal to the total of the initial mortgage advance plus any pre-agreed reserve. These amounts will be shown in the mortgage offer. |
| 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. |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| National Westminster Bank | An amount equal to the value of the property. |
| Perenna | The higher of the purchase price or valuation. |
| Saffron Building Society | Higher of purchase price or valuation. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage and also the borrower(s). |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| RBS (One Account) | An amount equal to the value of the property. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
| Zephyr Mortgages | 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. |
Non lender-specific considerations
The full terms, conditions and exclusions for possessory title indemnity insurance are set out in the policy paperwork. Conveyancing solicitors are obliged to direct the borrower to the possessory title indemnity insurance policy itself. The intention of possessory title indemnity insurance is to afford indemnity in respect of the risks specified in the policy schedule - so it is essential check the document to determine that it is correct. The continuance of this non-investment insurance agreement is in perpetuity unless otherwise stated in the possessory title indemnity insurance policy. Adequacy in this regard should be checked.Important features and benefits of possessory title indemnity insurance :
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. Possessory Title indemnity insurance Policies are likely to cover the following- The cost of works (including professional 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 possessory title indemnity insurance, to the extent that such costs are rendered abortive by court order.
- Liability for damages or compensation incurred in any action concerning the risks specified in the possessory title indemnity insurance, as well as legal and associated costs.
- Loss in market value resulting from the successful enforcement of the risks specified in the possessory title insurance.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- All sums paid with the written consent of the insurance company to free the property from the risks specified in the possessory title indemnity insurance.
- The out of pocket expenses of altering or demolishing 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.
As is the case with all conventional insurance, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the possessory title policy will be invalidated.
Possessory Title Indemnity Insurance has limitations - Further considerations
Possessory Title insurance may satisfy lenders such as Birmingham Midshires or Virgin Money and prevent clients from from suffering financially but it cannot compensate for the stress and inconvenience the emotional suffering - after all the value of a home cannot always be measured in cash in the eyes of the owner. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company 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 possessory title 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 is in relation to properties in England and Wales.