Adoption of Road or Sewer Indemnity Insurance Lender conveyancing requirements
Leeds Building Society and Godiva Mortgages, as with most banks, set their own specific instructions when it comes to adoption of road or sewer indemnity insurance. The content herein aims to help residential conveyancing lawyers on the various bank solicitors panel where the title for the the property to be mortgaged includes adoption of road or sewer. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each bank, whether it be Accord, HSBC or Bank of Scotland. 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 Nationwide as with the majority of mortgage companies, requirements are that where adoption of road or sewer indemnity insurance is to be put on risk:
- your firm is required to reveal to the insurer all relevant information which you have gathered
- your firm is duty bound to explain 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 lender of any notice or potential claim in relation to the insurance
- the level of indemnity must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- you are responsible for approving the terms of the adoption of road or sewer policy on behalf of the bank
- you must send 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 might be necessary if there is supplemental borrowing against the security of the property
- the adoption of road or sewer indemnity insurance policy should not contain conditions that you recognise would void or compromise the interests of the lender
- the adoption of road or sewer indemnity insurance policy needs to be for the benefit of the lender and, if possible, in favour of the mortgagor and any next owner or bank. Where the mortgagor will not be covered by the adoption of road or sewer indemnity insurance policy, the mortgagor needs to be advised accordingly.
- the adoption of road or sewer indemnity insurance policy should be effected at no expense to the lender
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Chelsea 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. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| Godiva Mortgages | Minimum of the value of the property. |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Harpenden Building Society | 110% of mortgage advance |
| ITL Mortgages | Minimum of the value of the property. |
| 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. |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| LendInvest | An amount at least equal to the valuation of the property. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| Rely Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| Whistletree | The value of the property |
Non lender-specific considerations
The full terms, conditions and exclusions for adoption of road or sewer indemnity insurance are explained in the policy paperwork. Conveyancing solicitors are obliged to direct the borrower to the adoption of road or sewer indemnity insurance policy paperwork. Adoption of Road or Sewer Contingency insurance is designed to provide indemnity in respect of the risks specified in the policy schedule - so you should 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.Important features 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- 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.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- Money paid with consent in writing from the insurance company to free the land from the risks specified in the adoption of road or sewer indemnity insurance.
- Loss in market value due to the successful enforcement of the risks specified in the adoption of road or sewer indemnity insurance.
- Expenses for works (including professional fees) for the purpose of the development commenced, 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 order.
- Reimbursement for compensation incurred in any proceedings concerning the risks specified in the adoption of road or sewer indemnity insurance, including fees of a legal nature.
As with any insurance policy, 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 - Additional considerations
Adoption of Road or Sewer insurance may satisfy lenders such as Halifax 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. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company conveyancing 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 is in relation to properties in England and Wales.