Adverse Possession Indemnity Insurance Bank conveyancing requirements
Godiva Mortgages and Santander, like most banks, set their own specific instructions when it comes to adverse possession indemnity insurance. This page is designed to help conveyancing solicitors on the numerous mortgage company approved list of panel lawyers where the title for the the property to be mortgaged contains adverse possession. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each bank, be it Nationwide, RBS or Chelsea BS. 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?
Yorkshire Bank Home Loans and Virgin Money in common with many lenders, obligations require that where adverse possession indemnity insurance is to be taken out:
- the limit of indemnity must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- your firm must send a copy 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 necessary if there is supplemental lending against the mortgaged property
- your practice is required to disclose to the insurer all relevant information which you have acquired
- your practice are responsible for approving the terms of the adverse possession policy on behalf of the bank
- the adverse possession indemnity insurance policy should be effected without expense to the mortgage company
- your practice is duty bound to point out to the borrower that the borrower must adhere to any conditions of the adverse possession indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in respect of the insurance
- the adverse possession indemnity insurance policy must be in favor of the lender and, wherever possible, for the benefit of the borrower and any subsequent registered proprietor or mortgagee. Where the mortgagor will not be covered by the adverse possession indemnity insurance policy, the mortgagor needs to be informed accordingly.
- the adverse possession indemnity insurance policy must not contain conditions that you recognise would void or prejudice the interests of the mortgage company
| Lender | Requirement |
|---|---|
| Adam & Company International | The open market value of the property according to the valuation report. |
| Aldermore Bank | 110% of the purchase price or valuation, whichever is greater. 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). Where a property is being sold at undervalue and an equity gift is being provided, the conveyancer must ensure the seller obtains an Insolvency Act Indemnity Insurance Policy and provides evidence to you, so that you are comfortable an appropriate policy is in place to Aldermore’s satisfaction. This indemnity insurance aims to cover Aldermore against any future claims by creditors of the seller that may challenge the sale. |
| Allied Irish Bank | At least the amount of the mortgage advance. |
| Clydesdale Bank | Open market value of property. |
| Coventry Building Society | Minimum of the value of the property. |
| 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. |
| Halifax | An amount at least equal to the mortgage advance. |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Hampden | The open market value of the property according to the valuation report. |
| Magellan Homeloans | At least equal to the value of the property |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| National Westminster Bank | An amount equal to the value of the property. |
| Nedbank | You are to refer to us for specific instructions on any matter involving indemnity insurance. |
| New Street Mortgages | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Platform | 110% of principal sum. |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| Royal Bank of Scotland -Natwest 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. |
| Zephyr Mortgages | 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. |
Non lender-specific considerations
The extent of the terms for adverse possession indemnity insurance are shown in the policy document. Conveyancing Practitioners should direct the borrower to the adverse possession indemnity insurance policy paperwork. Adverse Possession Contingency insurance is devised to afford indemnity in respect of the risks specified in the policy schedule - so it’s important to check the document to ensure it is correct. The duration of this non-investment insurance agreement is in perpetuity unless otherwise stated in the adverse possession indemnity insurance policy. Adequacy in this regard should be checked.Important aspects and benefits of adverse possession Contingency 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. Adverse Possession indemnity insurance Policies should be checked for the following- 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.
- Money paid with consent in writing from the insurance company to liberate the property from the risks specified in the adverse possession indemnity insurance.
- Loss in market value resulting from the successful enforcement of the risks specified in the adverse possession indemnity insurance.
- Liability for damages or compensation incurred in any proceedings concerning the risks specified in the adverse possession insurance, including solicitors charges.
- Expenses for 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 adverse possession indemnity insurance, to the extent that such costs are rendered abortive by court decision.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
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 adverse possession policy will be invalidated.
Adverse Possession Indemnity Insurance has limitations - Other considerations
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from adverse possession insurance may be adequate for your client. Information provided on this webpage is for general information for conveyancers and solicitors in England and Wales on the the bank solicitor 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 adverse possession 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.