Lender conveyancing panel conditions re Adoption of Road or Sewer Indemnity Insurance
Lloyds TSB and Halifax, as with most banks, set their own specific instructions when it comes to adoption of road or sewer indemnity insurance. The purpose of this page to assist residential conveyancing firms on the different bank approved list of panel lawyers where the title to be charged includes adoption of road or sewer. Lawyers are advised to familiarise themselves with the CML handbook requirements for each lender, whether it be Virgin Money, Nationwide or Yorkshire Building Society. The content on this page is not focused on adoption of road or sewer indemnity insurance requirements.
Need help with adoption of road or sewer indemnity insurance from your lender?
Leeds Building Society and Chelsea BS as with many banks, obligations require that where adoption of road or sewer indemnity insurance is effected:
- the adoption of road or sewer indemnity insurance policy should be effected at no charge to the bank
- you is required to reveal to the insurer all relevant information which you have gathered
- the adoption of road or sewer indemnity insurance policy must not contain terms which you recognise would invalidate or prejudice the interests of the lender
- 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 may be required if there is supplemental lending against the mortgaged property
- your practice are responsible for approving the terms of the adoption of road or sewer policy on behalf of the mortgage company
- your firm is duty bound to point out to the mortgagor that the borrower is obliged to adhere to any conditions of the adoption of road or sewer indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in relation to the policy
- the level of indemnity must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- the adoption of road or sewer indemnity insurance policy should always be in favor of the bank and, if possible, in favour of the mortgagor and any subsequent registered proprietor or mortgage company. Where the borrower will not be protected by the adoption of road or sewer indemnity insurance policy, you must advise the mortgagor of this fact.
| Lender | Requirement |
|---|---|
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Bank of Scotland Private | [This lender has not published an answer to this question. Please contact the lender.]
|
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| 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. |
| Investec | The open market value of the property according to the valuation report. |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| 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. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| Masthaven Bank | 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. |
| National Westminster Bank | An amount equal to the value of the property. |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Perenna | The higher of the purchase price or 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. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| TSB | The value of the property |
| 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. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
General Adoption of Road or Sewer indemnity insurance points to consider
The full terms, conditions and exclusions for adoption of road or sewer indemnity insurance are identified in the policy document. Conveyancing Practitioners should point the borrower to the adoption of road or sewer indemnity insurance policy document. The intention of adoption of road or sewer indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so you should check the document to ensure it is in order. The lifetime of this non-investment insurance contract is in perpetuity unless otherwise stated in the adoption of road or sewer indemnity insurance policy. Adequacy in this regard should be checked.Significant aspects and benefits of adoption of road or sewer 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. Adoption of Road or Sewer indemnity insurance Cover normally includes- Diminution in value resulting from the successful enforcement of 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 insurer
- Money paid with consent in writing from the insurance company to liberate the land from the risks specified in the adoption of road or sewer insurance.
- 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.
- Expenses for 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 adoption of road or sewer indemnity insurance, to the extent that such costs are rendered abortive by court decision.
- Cover for compensation incurred in any proceedings in respect of the risks specified in the adoption of road or sewer policy, as well as fees of a legal nature.
You also need to be sure that the answers on the application form are correct. Regardless of how remote a claim on the lender insurance policy might be you can certain that the insurer will check the details on any proposal form thoroughly before any claim is met.
Supplemental considerations for adoption of road or sewer indemnity insurance
There may be consequences arising from the enforcement of the risks identified in the adoption of road or sewer 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 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.