Adoption of Road or Sewer Indemnity Insurance Mortgage Company conveyancing requirements
Lloyds TSB and Barnsley BS, as with the majority of banks, set their own specific instructions when it comes to adoption of road or sewer indemnity insurance. This page is designed to help domestic conveyancing solicitors on the different bank conveyancing panel where the title to be charged incorporates adoption of road or sewer. It is not a substitute for checking the CML handbook requirements for each bank, be it Nationwide, RBS or Halifax. The content on this page Is not to be read as adoption of road or sewer indemnity insurance advice.
Need help with adoption of road or sewer indemnity insurance from your lender?
Coventry BS and Godiva Mortgages as with the majority of lenders, obligations require that where adoption of road or sewer indemnity insurance is to be taken out:
- your firm must approve the terms of the adoption of road or sewer policy on behalf of the bank
- the adoption of road or sewer indemnity insurance policy should not contain conditions which you know would invalidate or compromise the interests of the mortgage company
- you must provide a duplicate of the adoption of road or sewer indemnity insurance to the borrower and explain to the mortgagor why the adoption of road or sewer indemnity insurance policy was effected and that a further policy may be necessary if there is supplemental lending against the security of the property
- the adoption of road or sewer indemnity insurance policy needs to be for the benefit of the bank and, if possible, in favour of the mortgagor and any future owner or mortgage company. If the mortgagor will not be protected by the adoption of road or sewer indemnity insurance policy, the borrower must be advised accordingly.
- the adoption of road or sewer indemnity insurance policy should be placed on risk without charge to the lender
- your practice is duty bound to spell out to the mortgagor that the borrower will need to adhere to any conditions of the adoption of road or sewer indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in respect of the insurance
- the limit of indemnity must satisfy the requirements for the bank (See Part II Handbook requirements )
- you must disclose to the insurer all relevant information which you have obtained
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| April Mortgages | An amount at least equal to the mortgage advance. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Bluestone Mortgages | An amount at least equal to the total mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| GE Money | GE Money Home Lending has withdrawn from the UK mortgage market. |
| Habito | Higher of purchase price or valuation |
| Hodge Equity Release | An amount equal to the purchase price or value, whichever is higher. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage, the borrower(s) and any successor in Title. |
| Investec | The open market value of the property according to the valuation report. |
| Kensington Mortgage | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| TSB | The value of the property |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| RBS- First Active | 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. |
General Adoption of Road or Sewer indemnity insurance points to consider
The extent of the terms for adoption of road or sewer indemnity insurance are explained in the policy document. Conveyancing solicitors should direct the borrower to the adoption of road or sewer indemnity insurance policy itself. Adoption of Road or Sewer Contingency insurance is designed to afford indemnity in respect of the risks specified in the policy schedule - so it’s important to check any draft to ensure it is in order. The continuance of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.Adoption of Road or Sewer Contingency insurance: Important features and benefits:
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. Adoption of Road or Sewer indemnity insurance Policies are likely to cover the following- All sums paid with consent in writing from the insurance company to liberate the property from the risks specified in the adoption of road or sewer policy.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Market value reduction due to the successful enforcement of the risks specified in the adoption of road or sewer insurance.
- Cover for compensation incurred in any proceedings regarding the risks specified in the adoption of road or sewer insurance, as well as fees of a legal nature.
- The cost of works (including professional fees) for the purpose of the development begun, or contracted for, prior to proceedings for the enforcement of the risks specified in the adoption of road or sewer indemnity insurance, to the extent that such costs are rendered abortive by court decision.
- 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.
Don't forget to consider what is not included in the adoption of road or sewer insurance e.g. does the policy cover any property that has been altered within the 12 months prior to the policy being put on risk? Are legal costs covered?
Adoption of Road or Sewer Indemnity Insurance has limitations - Further considerations
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from adoption of road or sewer 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 bank 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 adoption of road or sewer 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.