Adoption of Road or Sewer Indemnity Insurance Mortgage Company conveyancing requirements
Lloyds TSB and Skipton, as with the majority of lenders, set their own requirements when it comes to adoption of road or sewer indemnity insurance. The content herein aims to help residential conveyancing lawyers on the different lender approved list of panel lawyers where the title to be charged contains adoption of road or sewer. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each bank, whether it be Yorkshire Bank Home Loans, Leeds Building Society or Halifax. The information 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?
Coventry BS and Chelsea BS as with many lenders, requirements are that where adoption of road or sewer indemnity insurance is effected:
- the adoption of road or sewer indemnity insurance policy must not incorporate conditions which you recognise would void or compromise the interests of the mortgage company
- your firm must approve the terms of the adoption of road or sewer policy on behalf of the lender
- the adoption of road or sewer indemnity insurance policy must be in favor of the bank and, wherever possible, for the benefit of the borrower and any subsequent registered proprietor or bank. Where the borrower will not be covered by the adoption of road or sewer indemnity insurance policy, the borrower should be informed accordingly.
- your firm is duty bound to explain to the borrower 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 adoption of road or sewer indemnity insurance policy must be effected without cost to the bank
- your firm must supply a copy of the adoption of road or sewer indemnity insurance to the mortgagor and explain to the mortgagor why the adoption of road or sewer indemnity insurance policy was effected and that a further policy might be necessary if there is further borrowing against the security of the property
- your practice is required to disclose to the insurer all relevant information which you have gathered
- the minimum level of cover for the policy must satisfy the requirements for the lender (See Part II Handbook requirements )
| Lender | Requirement |
|---|---|
| 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. |
| Allied Irish Bank | At least the amount of the mortgage advance. |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Coutts & Co | The open market value of the property according to the valuation report. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Family Building Society | An amount at least equal to the mortgage advance. |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| 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. |
| JPMorgan | 110% of principal sum. |
| 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. |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| 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. |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| Royal Bank of Scotland | An amount equal to the value of the property. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| RBS - Virgin One | 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 paperwork. Property lawyers are obliged to point your non-lender client to the adoption of road or sewer indemnity insurance policy paperwork. Adoption of Road or Sewer indemnity insurance is designed to provide indemnity in respect of the risks set out in the policy schedule - so it’s important to check the document to ensure it is as it should be. The continuance 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 features and benefits of adoption of road or sewer 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. Adoption of Road or Sewer indemnity insurance Policies are likely to cover the following- 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.
- Reimbursement for compensation incurred in any proceedings regarding the risks specified in the adoption of road or sewer indemnity insurance, including solicitors charges.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development started, 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.
- Market value reduction due to the successful enforcement of the risks specified in the adoption of road or sewer policy.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- 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 insurance.
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.
Adoption of Road or Sewer Indemnity Insurance has limitations - Supplemental considerations
Adoption of Road or Sewer Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that adoption of road or sewer indemnity cover will not necessarily be the right solution. Information provided on this webpage is for general information for Regulated law firms in England and Wales on the the lender conveyancing 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.