Lender conveyancing panel requirements re Contaminated Land Indemnity Insurance
Birmingham Midshires and Barclays, in common with many lenders, dictate their own requirements when it comes to contaminated land indemnity insurance. This page sets out to enlighten conveyancing practitioners on the numerous lender approved list of panel lawyers where the title for the the property to be mortgaged includes contaminated land. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each lender, be it Accord, Yorkshire Building Society or RBS. The content on this page Is not to be read as contaminated land indemnity insurance advice.
Need help with contaminated land indemnity insurance from your lender?
Nationwide and Natwest in common with most banks, instructions are such that where contaminated land indemnity insurance is to be taken out:
- your practice must supply a copy of the contaminated land indemnity insurance to the mortgagor and explain to the borrower why the contaminated land indemnity insurance policy was effected and that a further policy could be mandatory if there is additional lending against the mortgaged property
- the contaminated land indemnity insurance policy needs to be in favor of the lender and, if possible, for the benefit of the borrower and any next registered proprietor or mortgage company. Where the borrower will not be covered by the contaminated land indemnity insurance policy, you must advise the mortgagor of this fact.
- you are responsible for approving the terms of the contaminated land policy on behalf of the mortgage company
- your practice is duty bound to point out to the borrower that the borrower is obliged to comply with any conditions of the contaminated land indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the policy
- the contaminated land indemnity insurance policy should be placed on risk without expense to the bank
- the limit of indemnity must satisfy the requirements for the bank (See Part II Handbook requirements )
- the contaminated land indemnity insurance policy must not contain terms which you are aware would invalidate or prejudice the interests of the lender
- your firm must reveal to the insurer all relevant information which you have acquired
| Lender | Requirement |
|---|---|
| Accord 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 mortgagee. |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Investec | The open market value of the property according to the valuation report. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| Leeds Building Society | An amount at least equal to the amount of the mortgage advance plus 10%. Any indemnity insurance policy must protect the borrowers, any successor in title and any Mortgagee. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| 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. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Perenna | The higher of the purchase price or valuation. |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| Scottish Widows | The value of the property. |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| Ulster Bank | An amount equal to the value of the property. |
| 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 full terms, conditions and exclusions for contaminated land indemnity insurance are explained in the policy paperwork. Conveyancing Practitioners are obliged to direct your non-lender client to the contaminated land indemnity insurance policy paperwork. Contaminated Land Contingency insurance is designed to provide indemnity in respect of the risks specified in the policy schedule - so it’s important to check the document to ensure it is in order. The duration of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.Contaminated Land indemnity insurance: Significant aspects and benefits:
The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the contaminated land indemnity insurance schedule. Contaminated Land indemnity insurance Cover normally includes- All sums paid with consent in writing from the insurance company to liberate the property from the risks specified in the contaminated land indemnity insurance.
- Expenses for works (including professional fees) for the purpose of the development begun, or contracted for, prior to 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.
- The out of pocket expenses 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.
- Diminution in value due to the successful enforcement of the risks specified in the contaminated land policy.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Cover for compensation incurred in any proceedings regarding the risks specified in the contaminated land indemnity insurance, including fees of a legal nature.
Always check what is excluded from the contaminated land indemnity insurance e.g. does the policy cover any residence that has been altered within the year prior to the policy being put on risk? Does it cover legal costs?
Additional considerations for contaminated land indemnity insurance
Contaminated Land Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that contaminated land indemnity cover will not necessarily be the answer. Content on this webpage is for general information for conveyancers and solicitors in England and Wales on the the lender 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 content set out above is in relation to properties in England and Wales.