Contaminated Land Indemnity Insurance Lender conveyancing requirements
Nationwide and Coventry BS, like many mortgage companies, have their own requirements when it comes to contaminated land indemnity insurance. This page is designed to help conveyancing lawyers on the different mortgage company solicitors panel where the title for the the property to be mortgaged incorporates contaminated land. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each lender, for example RBS, Leeds Building Society or Barnsley BS. The information on this page is not focused on contaminated land indemnity insurance requirements.
Need help with contaminated land indemnity insurance from your lender?
Halifax and Accord in common with many mortgage companies, instructions are such that where contaminated land indemnity insurance is to be put on risk:
- the contaminated land indemnity insurance policy must not contain terms which you recognise would invalidate or compromise the interests of the bank
- your practice are responsible for approving the terms of the contaminated land policy on behalf of the mortgage company
- the contaminated land indemnity insurance policy needs to be in favor of the bank and, wherever possible, in favour of the mortgagor and any future owner or bank. If the borrower will not be covered by the contaminated land indemnity insurance policy, the borrower needs to be informed accordingly.
- your firm must supply a copy of the contaminated land indemnity insurance to the borrower and explain to the borrower why the contaminated land indemnity insurance policy was effected and that a further policy may be necessary if there is further lending against the security of the property
- your firm is required to reveal to the insurer all relevant information which you have gathered
- your firm must point out to the borrower that the borrower is obliged to adhere to any conditions of the contaminated land indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in relation to the policy
- the minimum level of cover for the policy must satisfy the requirements for the bank (See Part II Handbook requirements )
- the contaminated land indemnity insurance policy should be effected without charge to the bank
| Lender | Requirement |
|---|---|
| Barclays plc | Higher of purchase price or valuation |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Hinckley and Rugby | The policy must be for our benefit and for no less than the amount lent to the borrower, including retentions, stage payments and interest. |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| Legal & General Home Finance | The policy should be for the full market value of the property and indexed linked. The policy must be for our benefit, and for the benefit of the borrower where available. The policy must benefit all successors and assigns. |
| Molo Finance Buy to Let | An amount at least equal to the amount of the mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgages. |
| New Street Mortgages | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Platform | 110% of principal sum. |
| Progressive BS | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher. |
| Rely Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Saffron Building Society | Higher of purchase price or valuation. 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). |
| TSB | The value of the property |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| The Mortgage Works | The full purchase price/value of the property whichever is higher |
| Royal Bank of Scotland | An amount equal to the value of the property. |
| RBS - Direct Line One | An amount equal to the value of the property. |
| Together Personal Finance | Minimum of £2,000,000.00 per claim. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
Contaminated Land Contingency Insurance : Reflections
The extent of the terms for contaminated land indemnity insurance are explained in the policy document. Conveyancing solicitors are obliged to direct your non-lender client to the contaminated land indemnity insurance policy itself. The intention of contaminated land indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so it’s important to check any draft to determine that it is in order. The lifetime of this non-investment insurance contract is in perpetuity unless otherwise stated in the contaminated land indemnity insurance policy. Again, please check that this is as you expected.Contaminated Land indemnity insurance: Important characteristics and benefits:
Protection via such a policy is to cover the risk of third parties looking to enforce rights that can affect the use of a property. Contaminated Land indemnity insurance Policies are likely to cover the following- Diminution in value due to the successful enforcement of the risks specified in the contaminated land insurance.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Reimbursement for compensation incurred in any action in respect of the risks specified in the contaminated land policy, as well as solicitors charges.
- 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 contaminated land policy, to the extent that such costs are rendered abortive by court decision.
- Money paid with consent in writing from the insurance company to free the property from the risks specified in the contaminated land insurance.
- 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.
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 contaminated land policy will not be valid.
Contaminated Land Indemnity Insurance has limitations - Supplemental considerations
Contaminated Land insurance may satisfy lenders such as Santander or Natwest 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. Information contained within this webpage is for general information for Regulated law firms 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 lender 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 contaminated land 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 covers to properties in England and Wales.