Adverse Possession Indemnity Insurance Bank conveyancing requirements

Barclays and Natwest, in common with most mortgage companies, have their own specific instructions when it comes to adverse possession indemnity insurance. This page sets out to enlighten property law practitioners on the different lender approved list of panel lawyers where the title for the the property to be mortgaged includes adverse possession. Solicitors should still check the CML handbook requirements for each lender, whether it be Accord, Lloyds TSB or Yorkshire Bank Home Loans. 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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Godiva Mortgages and Leeds Building Society like many mortgage companies, obligations require that where adverse possession indemnity insurance is to be taken out:

• your practice is obliged to reveal to the insurer all relevant information which you have acquired
• the adverse possession indemnity insurance policy should not incorporate conditions which you are aware would invalidate or compromise the interests of the bank
• you must spell out to the mortgagor that the borrower is obliged to comply with any conditions of the adverse possession indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in relation to the insurance
• your practice are responsible for approving the terms of the adverse possession policy on behalf of the mortgage company
• the adverse possession indemnity insurance policy should be effected at no charge to the mortgage company
• 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 additional insurance might be necessary if there is supplemental lending against the mortgaged property
• the adverse possession indemnity insurance policy should always be for the benefit of the mortgage company and, wherever possible, in favour of the mortgagor and any future registered proprietor or mortgage company. If the borrower will not be protected by the adverse possession indemnity insurance policy, the borrower must be informed accordingly.
• the limit of indemnity must satisfy the requirements for the bank (See Part II Handbook requirements )

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:

Adverse Possession Contingency Insurance : Reflections

The extent of the terms for adverse possession indemnity insurance are explained in the policy document. Conveyancing Practitioners are obliged to point your non-lender client to the adverse possession indemnity insurance policy itself. The intention of adverse possession indemnity insurance is to grant indemnity in respect of the risks specified in the policy schedule - so you should check any draft to ensure it is as it should be. The lifetime of this non-investment insurance contract 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: Important features and benefits:

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 are likely to cover the following

• Market value reduction due to the successful enforcement of the risks specified in the adverse possession policy.
• The cost of altering or destroying 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 action concerning the risks specified in the adverse possession indemnity insurance, as well as incurred costs and expenses.
• Expenses for works (including professional fees) for the purpose of the development commenced, prior to proceedings for the enforcement of the risks specified in the adverse possession policy, to the extent that such costs are rendered abortive by court order.
• Money paid with the written consent of the insurance company to free the land from the risks specified in the adverse possession insurance.
• All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company

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Don't forget to check what is not included in the adverse possession policy e.g. does the policy cover any property that has been altered within the year prior to the commencement of the policy? Are legal costs covered?

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Adverse Possession Indemnity Insurance has limitations - Other considerations

Adverse Possession insurance may satisfy lenders such as Yorkshire Building Society or Skipton 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 content set out above is in relation to properties in England and Wales.