Adverse Possession Indemnity Insurance Bank conveyancing requirements

HSBC and Yorkshire Building Society, as with the majority of banks, set their own specific instructions when it comes to adverse possession indemnity insurance. The content herein aims to help conveyancing practitioners on the different mortgage company solicitors panel where the title for the the property to be mortgaged incorporates adverse possession. It is not a alternative for checking the Council of Mortgage Lenders’ handbook requirements for each bank, whether it be Godiva Mortgages, Barclays or Leeds Building Society. The information 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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Nationwide and Halifax like many banks, instructions are such that where adverse possession indemnity insurance is effected:

• the adverse possession indemnity insurance policy must not incorporate terms that you know would void or compromise the interests of the mortgage company
• the minimum level of cover for the policy must meet the requirements for the lender (See Part II Handbook requirements )
• you must point out to the mortgagor that the borrower must adhere to 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 approve the terms of the adverse possession policy on behalf of the bank
• the adverse possession indemnity insurance policy must be effected without expense to the mortgage company
• the adverse possession indemnity insurance policy should always be in favor of the lender and, if possible, in favour of the borrower and any next registered proprietor or mortgagee. Where the borrower will not be covered by the adverse possession indemnity insurance policy, you must advise the mortgagor of this fact.
• your practice must send 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 may be mandatory if there is supplemental borrowing against the security of the property
• your firm must disclose to the insurer all relevant information which you have acquired

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 Paragraph 9.2 of the CML handbook PII requirements for banks:

Adverse Possession Contingency Insurance : Reflections

The full terms, conditions and exclusions for adverse possession indemnity insurance are explained in the policy document. Property lawyers are obliged to point your non-lender client to the adverse possession indemnity insurance policy document. Adverse Possession indemnity insurance is devised to provide indemnity in respect of the risks specified in the policy schedule - so it is essential check the schedule to determine that 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.

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Important features and benefits of adverse possession indemnity 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 Cover normally includes

• Loss in market value resulting from the successful enforcement of the risks specified in the adverse possession policy.
• Money paid with consent in writing from the insurance company to liberate the property from the risks specified in the adverse possession policy.
• Cover for compensation incurred in any proceedings regarding the risks specified in the adverse possession insurance, including fees of a legal nature.
• 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.
• All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
• The cost of works (including professional fees) for the purpose of the development started, before the commencement of proceedings for the enforcement of the risks specified in the adverse possession policy, to the extent that such costs are rendered abortive by court decision.

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You also need to be sure that the answers on the application form are accurate. However remote the likelihood of a claim on the mortgage company insurance policy might be you can rest assured that the insurer will check the details on any proposal form very carefully before any claim is admitted.

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Adverse Possession Indemnity Insurance has limitations - Supplemental considerations

There may be consequences arising from the enforcement of the risks identified in the adverse possession indemnity insurance which are not adequately covered by financial compensation.

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The content set out above covers to properties in England and Wales.