Lender conveyancing panel conditions re Contaminated Land Indemnity Insurance
Lloyds TSB and Godiva Mortgages, as with most mortgage companies, have their own specific instructions when it comes to contaminated land indemnity insurance. The purpose of this page to assist conveyancing solicitors on the various lender solicitors panel where the title for the the property to be mortgaged includes contaminated land. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each lender, for example HSBC, Halifax or Birmingham Midshires. The content on this page is not focused on contaminated land indemnity insurance requirements.
Need help with contaminated land indemnity insurance from your lender?
Virgin Money and Yorkshire Building Society as with the majority of banks, obligations require that where contaminated land indemnity insurance is effected:
- you is duty bound to 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 respect of the insurance
- your practice must approve the terms of the contaminated land policy on behalf of the lender
- the contaminated land indemnity insurance policy should not contain conditions that you are aware would invalidate or compromise the interests of the bank
- the contaminated land indemnity insurance policy should always be in favor of the bank and, if possible, in favour of the mortgagor and any subsequent owner or bank. Where the borrower will not be protected by the contaminated land indemnity insurance policy, you must advise the borrower of this fact.
- your practice 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 borrowing against the mortgaged property
- the minimum level of cover for the policy must meet the requirements for the mortgage company (See Part II Handbook requirements )
- you is obliged to reveal to the insurer all relevant information which you have acquired
- the contaminated land indemnity insurance policy should be placed on risk at no charge to the lender
| 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. |
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Hampden | The open market value of the property according to the valuation report. |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| Magellan Homeloans | At least equal to the value of the property |
| Masthaven Bank | 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. |
| NRAM Ltd | Preference for full market value of the property, but if this level of cover is not available, will accept a minimum of the actual loan amount. You must approve the policy on our behalf. |
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Perenna | The higher of the purchase price or valuation. |
| Progressive BS | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| St James Place | An amount at least equal to the total of the initial mortgage advance plus any pre-agreed reserve. These amounts will be shown in the mortgage offer. |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| Royal Bank of Scotland | 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. |
Non lender-specific considerations
The extent of the terms for contaminated land indemnity insurance are shown in the policy document. Conveyancing solicitors are obliged to direct the borrower to the contaminated land indemnity insurance policy itself. Contaminated Land Contingency insurance is devised to provide indemnity in respect of the risks set out in the policy schedule - so you should check any draft to ensure 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. It is well worth checking that the time frame is correct.Important features and benefits of contaminated land Contingency 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- Expenses for 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.
- Liability for damages or compensation incurred in any proceedings in respect of the risks specified in the contaminated land policy, as well as incurred costs and expenses.
- 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.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Loss in market value resulting from the successful enforcement of the risks specified in the contaminated land insurance.
- All sums paid with consent in writing from the insurance company to free the land from the risks specified in the contaminated land insurance.
Always check what is excluded from the contaminated land policy e.g. does the policy cover any property that has been altered within the 12 months prior to the policy being put on risk? Does it cover legal costs?
Additional considerations for contaminated land indemnity insurance
Contaminated Land Indemnity insurance isn’t a solution to all of the relevant problems. Information provided on this webpage is for general information for Regulated law firms in England and Wales on the the lender approved panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the bank 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.