Lender conveyancing panel requirements re Adverse Possession Indemnity Insurance

Barclays and Santander, in common with most mortgage companies, set their own specific instructions when it comes to adverse possession indemnity insurance. This page sets out to enlighten domestic conveyancing solicitors on the various mortgage company solicitors panel where the title to be charged includes adverse possession. It is not a alternative for checking the CML handbook requirements for each mortgage company, be it Yorkshire Bank Home Loans, Bank of Scotland or Barnsley BS. The content on this page is not focused on adverse possession indemnity insurance requirements.

Need help with adverse possession indemnity insurance from your lender?

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Virgin Money and Godiva Mortgages like the majority of banks, obligations require that where adverse possession indemnity insurance is to be put on risk:

• you are responsible for approving the terms of the adverse possession policy on behalf of the bank
• your practice must supply a copy of the adverse possession indemnity insurance to the borrower and explain to the borrower why the adverse possession indemnity insurance policy was effected and that additional insurance might be mandatory if there is additional borrowing against the mortgaged property
• the minimum level of cover for the policy must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
• the adverse possession indemnity insurance policy should be effected at no expense to the lender
• you must reveal to the insurer all relevant information which you have acquired
• the adverse possession indemnity insurance policy must not incorporate terms which you know would void or prejudice the interests of the lender
• the adverse possession indemnity insurance policy must be in favor of the lender and, if possible, in favour of the borrower and any future owner or bank. If the borrower will not be protected by the adverse possession indemnity insurance policy, the mortgagor needs to be advised accordingly.
• your practice is duty bound to point out to the borrower that the borrower will need to adhere to any conditions of the adverse possession indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in respect of the policy

As to the level 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 CML handbook PII requirements for mortgage companies:

Non lender-specific considerations

The full terms, conditions and exclusions for adverse possession indemnity insurance are shown in the policy document. Conveyancing Practitioners should direct the borrower to the adverse possession indemnity insurance policy document. Adverse Possession Contingency insurance is designed to grant indemnity in respect of the risks set out in the policy schedule - so it’s important to check the document to ensure it is in order. The lifetime of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.

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Adverse Possession Contingency insurance: Important features and benefits:

The insurance 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 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.
• The cost of 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 adverse possession 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 adverse possession policy.
• Liability for damages or compensation incurred in any proceedings in respect of the risks specified in the adverse possession indemnity insurance, as well as solicitors charges.
• All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
• All sums paid with consent in writing from the insurance company to liberate the land from the risks specified in the adverse possession policy.

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Don't forget to consider 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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Supplemental considerations for adverse possession indemnity insurance

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.

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The above information covers to properties in England and Wales.