Bank conveyancing panel conditions re Adoption of Road or Sewer Indemnity Insurance
Virgin Money and Chelsea BS, in common with the majority of mortgage companies, have their own specific instructions when it comes to adoption of road or sewer indemnity insurance. This page sets out to enlighten residential conveyancing solicitors on the various bank conveyancing panel where the title for the the property to be mortgaged includes adoption of road or sewer. Lawyers are advised to familiarise themselves with the CML handbook requirements for each lender, for example Godiva Mortgages, Birmingham Midshires or Natwest. The information 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?
Accord and Halifax like most mortgage companies, requirements are that where adoption of road or sewer indemnity insurance is to be taken out:
- your practice must approve the terms of the adoption of road or sewer policy on behalf of the mortgage company
- the adoption of road or sewer indemnity insurance policy should not incorporate conditions that you recognise would void or compromise the interests of the bank
- your firm must provide a duplicate of the adoption of road or sewer indemnity insurance to the mortgagor and explain to the borrower why the adoption of road or sewer indemnity insurance policy was effected and that a further policy could be required if there is further borrowing against the mortgaged property
- the minimum level of cover for the policy must meet the requirements for the mortgage company (See Part II Handbook requirements )
- you must explain to the borrower that the borrower is obliged to adhere to any conditions of the adoption of road or sewer indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in relation to the policy
- the adoption of road or sewer indemnity insurance policy must be placed on risk at no expense to the bank
- the adoption of road or sewer indemnity insurance policy must be for the benefit of the lender and, wherever possible, in favour of the borrower and any next registered proprietor or mortgagee. If the mortgagor will not be protected by the adoption of road or sewer indemnity insurance policy, the mortgagor must be advised accordingly.
- you must disclose to the insurer all relevant information which you have gathered
| Lender | Requirement |
|---|---|
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| April Mortgages | An amount at least equal to the mortgage advance. |
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Barclays plc | Higher of purchase price or valuation |
| Bradford & Bingley | Amount of loan + 15% |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Investec | The open market value of the property according to the valuation report. |
| LendInvest | An amount at least equal to the valuation of the property. |
| Metro Bank | The open market value of the property according to the valuation report. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| New Street Mortgages | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Principality Building Society | Full market value of the property is preferred but if this is not available we will accept the loan advance amount as minimum. You must approve the policy on our behalf. The estimated property value is stated in the Mortgage Offer in remortgage cases. Otherwise it will be stipulated in the Valuation. |
| Secure Trust Bank | An amount at least equal to the market value. 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). |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| Whistletree | The value of the property |
| Yorkshire Building Society | 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. |
Non lender-specific considerations
The extent of the terms for adoption of road or sewer indemnity insurance are set out in the policy paperwork. Conveyancing solicitors are obliged to point the borrower to the adoption of road or sewer indemnity insurance policy paperwork. The intention of adoption of road or sewer indemnity insurance is to afford indemnity in respect of the risks set out in the policy schedule - so it’s important to check the document to ensure it is correct. The continuance of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.Adoption of Road or Sewer indemnity insurance: Significant aspects and benefits:
The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the adoption of road or sewer indemnity insurance schedule. Adoption of Road or Sewer indemnity insurance Policies are likely to cover the following- Money paid with the written consent of the insurance company to free the land from the risks specified in the adoption of road or sewer insurance.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
- 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.
- Market value reduction resulting from the successful enforcement of the risks specified in the adoption of road or sewer policy.
- Expenses for 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 insurance, to the extent that such costs are rendered abortive by court order.
- Cover for compensation incurred in any proceedings regarding the risks specified in the adoption of road or sewer indemnity insurance, as well as legal and associated costs.
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 adoption of road or sewer policy will not be valid.
Further considerations for adoption of road or sewer indemnity insurance
Adoption of Road or Sewer insurance may satisfy lenders such as Bank of Scotland or Lloyds TSB 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. Content on this webpage is for general information for Regulated law firms 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 lender 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 content set out above covers to properties in England and Wales.