Contaminated Land Indemnity Insurance Lender conveyancing requirements
HSBC and Accord, as with the majority of mortgage companies, have their own requirements when it comes to contaminated land indemnity insurance. The content herein aims to help property law practitioners on the various mortgage company approved list of panel lawyers where the title to be charged includes contaminated land. It is not a substitute for checking the CML handbook requirements for each lender, whether it be Nationwide, Halifax or Coventry BS. The information on this page Is not to be read as contaminated land indemnity insurance advice.
Need help with contaminated land indemnity insurance from your lender?
Santander and Natwest in common with most lenders, instructions are such that where contaminated land indemnity insurance is to be put on risk:
- your practice must reveal to the insurer all relevant information which you have acquired
- your firm are responsible for approving the terms of the contaminated land policy on behalf of the mortgage company
- your firm 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 might be required if there is further lending against the mortgaged property
- the contaminated land indemnity insurance policy must be for the benefit of the lender and, wherever possible, in favour of the borrower and any subsequent owner or bank. If the borrower will not be protected by the contaminated land indemnity insurance policy, the mortgagor must be informed accordingly.
- the minimum level of cover for the policy must meet the requirements for the lender (See Part II Handbook requirements )
- the contaminated land indemnity insurance policy must not contain terms which you know would void or prejudice the interests of the bank
- your firm must point out to the borrower that the borrower will need to adhere to any conditions of the contaminated land indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in respect of the policy
- the contaminated land indemnity insurance policy must be placed on risk at no cost to the mortgage company
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Habito | Higher of purchase price or valuation |
| Investec | The open market value of the property according to the valuation report. |
| Lloyds | The value of the property. |
| Magellan Homeloans | At least equal to the value of the property |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| 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. |
| Metro Bank | The open market value of the property according to the valuation report. |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the advance. |
| Mortgage Express | Amount of loan + 15% |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Royal Bank of Scotland | An amount equal to the value of the property. |
| RBS - Virgin One | 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. |
| 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. |
| Zephyr Mortgages | 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. |
General Contaminated Land indemnity insurance points to consider
The extent of the terms for contaminated land indemnity insurance are shown in the policy paperwork. Conveyancing solicitors should direct your non-lender client to the contaminated land indemnity insurance policy itself. Contaminated Land Contingency insurance is designed to afford indemnity in respect of the risks specified in the policy schedule - so it is essential check any draft to determine that it is as it should be. The continuance 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 Contingency insurance: Significant characteristics 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 Policies are likely to cover the following- All sums paid with consent in writing from the insurance company to free the land from the risks specified in the contaminated land insurance.
- Expenses for 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 contaminated land indemnity insurance, to the extent that such costs are rendered abortive by court order.
- 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.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Market value reduction due to the successful enforcement of the risks specified in the contaminated land policy.
- Liability for damages or compensation incurred in any proceedings in respect of the risks specified in the contaminated land indemnity insurance, as well as fees of a legal nature.
Always consider 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 commencement of the policy? Does it cover legal costs?
Other considerations for contaminated land indemnity insurance
Contaminated Land Indemnity insurance isn’t a solution to all of the relevant problems. Information contained within this webpage is for general information for conveyancers and solicitors in England and Wales on the the mortgage company approved 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.