Indemnity Insurance of Contaminated Land Mortgage Company conveyancing requirements
Barclays and Birmingham Midshires, like many banks, set their own requirements when it comes to contaminated land indemnity insurance. This page sets out to enlighten conveyancing lawyers on the different bank conveyancing panel where the title to be charged incorporates contaminated land. Solicitors should still check the CML handbook requirements for each bank, be it Bank of Scotland, Virgin Money or Skipton. The content on this page is not focused on contaminated land indemnity insurance requirements.
Need help with contaminated land indemnity insurance from your lender?
Yorkshire Building Society and Yorkshire Bank Home Loans in common with many banks, instructions are such that where contaminated land indemnity insurance is effected:
- your firm 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 mortgagor should notify the lender of any notice or potential claim in respect of the policy
- the contaminated land indemnity insurance policy must be effected at no cost to the mortgage company
- you must reveal to the insurer all relevant information which you have gathered
- the minimum level of cover for the policy must meet the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- your practice are responsible for approving the terms of the contaminated land policy on behalf of the lender
- the contaminated land indemnity insurance policy should not incorporate conditions that you know would invalidate or prejudice the interests of the lender
- you must provide 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 additional insurance may be mandatory if there is supplemental lending against the security of the property
- the contaminated land indemnity insurance policy needs to be for the benefit of the mortgage company and, wherever possible, in favour of the borrower and any subsequent registered proprietor or mortgagee. If the mortgagor will not be protected by the contaminated land indemnity insurance policy, you must advise the borrower of this fact.
| Lender | Requirement |
|---|---|
| Adam & Company International | The open market value of the property according to the valuation report. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Bluestone Mortgages | An amount at least equal to the total mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| Clydesdale Bank | Open market value of property. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| 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. |
| Hodge Equity Release | An amount equal to the purchase price or value, whichever is higher. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage, the borrower(s) and any successor in Title. |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| Manchester Building Society | Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%. |
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Paratus | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| RBS (One Account) | An amount equal to the value of the property. |
| Topaz Finance | Valuation or purchase price, whichever is higher. The policy must always benefit the borrower and any subsequent owner or mortgagee - the policy must be index linked. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
General Contaminated Land indemnity insurance points to consider
The full terms, conditions and exclusions for contaminated land indemnity insurance are identified in the policy paperwork. Conveyancing Practitioners are obliged to direct the borrower to the contaminated land indemnity insurance policy paperwork. Contaminated Land Contingency insurance is devised to afford indemnity in respect of the risks specified in the policy schedule - so it’s important to check any draft to determine that it is correct. The lifetime 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.Significant characteristics and benefits of contaminated land 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. Contaminated Land indemnity insurance Cover normally includes- Liability for damages or compensation incurred in any action in respect of the risks specified in the contaminated land insurance, including fees of a legal nature.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- Money paid with the written consent of the insurance company to free the property from the risks specified in the contaminated land policy.
- The cost of works (including professional fees) for the purpose of the development started, 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.
- Loss in market value resulting from the successful enforcement of the risks specified in the contaminated land 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.
Always check what is excluded from the contaminated land indemnity insurance e.g. does the policy cover any property that has been altered within the 12 months prior to the policy being put on risk? Are legal costs covered?
Contaminated Land Indemnity Insurance has limitations - Additional considerations
Contaminated Land insurance may satisfy lenders such as Lloyds TSB or Barnsley BS 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 mortgage company 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 covers to properties in England and Wales.