Adverse Possession Indemnity Insurance Mortgage Company conveyancing requirements

Accord and Barnsley BS, as with most mortgage companies, set their own requirements when it comes to adverse possession indemnity insurance. The purpose of this page to assist conveyancing solicitors on the different lender approved list of panel lawyers where the title to be charged contains adverse possession. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each lender, whether it be Yorkshire Building Society, Virgin Money or Leeds Building Society. The content on this page Is not to be read as adverse possession indemnity insurance advice.

Need help with adverse possession indemnity insurance from your lender?

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Natwest and Birmingham Midshires as with most banks, obligations require that where adverse possession indemnity insurance is to be taken out:

• your firm must approve the terms of the adverse possession policy on behalf of the lender
• your practice must reveal to the insurer all relevant information which you have acquired
• the adverse possession indemnity insurance policy must be effected without expense to the lender
• the limit of indemnity must meet the requirements for the bank (See Part II Handbook requirements )
• your practice must spell out to the borrower that the borrower must comply with any conditions of the adverse possession indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in respect of the policy
• you must provide a duplicate of the adverse possession indemnity insurance to the mortgagor and explain to the borrower why the adverse possession indemnity insurance policy was effected and that a further policy could be mandatory if there is additional lending against the security of the property
• the adverse possession indemnity insurance policy needs to be for the benefit of the bank and, if possible, in favour of the mortgagor and any next owner or lender. Where the mortgagor will not be covered by the adverse possession indemnity insurance policy, you must advise the mortgagor of this fact.
• the adverse possession indemnity insurance policy should not contain conditions that you know would invalidate or prejudice the interests of the mortgage company

Regarding the extent of cover for the adverse possession indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Section 9.2 of the Part 2 requirements for banks:

General Adverse Possession indemnity insurance points to consider

The full terms, conditions and exclusions for adverse possession indemnity insurance are set out in the policy paperwork. Conveyancing Practitioners are obliged to point your non-lender client to the adverse possession indemnity insurance policy document. The intention of adverse possession indemnity insurance is to afford indemnity in respect of the risks specified in the policy schedule - so you should check any draft to ensure it is in order. The lifetime of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.

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Adverse Possession indemnity insurance: Significant characteristics and benefits:

The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the adverse possession indemnity insurance schedule. Adverse Possession indemnity insurance Policies are likely to cover the following

• Cover for compensation incurred in any action in respect of the risks specified in the adverse possession insurance, as well as fees of a legal nature.
• Money paid with consent in writing from the insurance company to free the property from the risks specified in the adverse possession policy.
• All other costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
• Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, prior to proceedings for the enforcement of the risks specified in the adverse possession 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.
• Diminution in value resulting from the successful enforcement of the risks specified in the adverse possession policy.

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Don't forget to check what is not included in the adverse possession indemnity insurance e.g. does the policy cover any residence that has been altered within the 12 months prior to the policy being put on risk? Does it cover legal costs?

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Adverse Possession Indemnity Insurance has limitations - Further considerations

Adverse Possession insurance may satisfy lenders such as Chelsea BS or Bank of Scotland 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.

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The above information covers to properties in England and Wales.