Contingent Buildings Indemnity Insurance Bank conveyancing requirements
Nationwide and Santander, in common with the majority of mortgage companies, set their own specific instructions when it comes to contingent buildings indemnity insurance. The purpose of this page to assist domestic conveyancing solicitors on the numerous bank solicitors panel where the title to be charged includes contingent buildings. Solicitors should still check the CML handbook requirements for each mortgage company, whether it be Natwest, Skipton or RBS. The content on this page Is not to be read as contingent buildings indemnity insurance advice.
Need help with contingent buildings indemnity insurance from your lender?
Godiva Mortgages and Birmingham Midshires in common with the majority of banks, requirements are that where contingent buildings indemnity insurance is effected:
- your practice must reveal to the insurer all relevant information which you have gathered
- your firm must provide a duplicate of the contingent buildings indemnity insurance to the mortgagor and explain to the borrower why the contingent buildings indemnity insurance policy was effected and that additional insurance could be required if there is further borrowing against the mortgaged property
- the contingent buildings indemnity insurance policy needs to be in favor of the bank and, if possible, in favour of the mortgagor and any subsequent owner or mortgagee. If the borrower will not be covered by the contingent buildings indemnity insurance policy, the mortgagor needs to be advised accordingly.
- your firm must approve the terms of the contingent buildings policy on behalf of the lender
- the contingent buildings indemnity insurance policy must not contain conditions that you recognise would invalidate or compromise the interests of the lender
- the contingent buildings indemnity insurance policy should be effected without expense to the mortgage company
- the level of indemnity must meet the requirements for the bank (See Part II Handbook requirements )
- your firm is duty bound to point out to the mortgagor that the borrower is obliged to comply with any conditions of the contingent buildings indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the policy
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Adam & Company International | The open market value of the property according to the valuation report. |
| Allied Irish Bank | At least the amount of the mortgage advance. |
| 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. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Hodge | 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. |
| Investec | The open market value of the property according to the valuation report. |
| Lloyds | 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. |
| Metro Bank | The open market value of the property according to the valuation report. |
| Platform | 110% of principal sum. |
| Reliance Bank | \xA31,000,000.00 |
| Rely Mortgages | An amount at least equal to 110% of the mortgage 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. |
| 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. |
Non lender-specific considerations
The full terms, conditions and exclusions for contingent buildings indemnity insurance are identified in the policy document. Conveyancing Practitioners should direct your non-lender client to the contingent buildings indemnity insurance policy itself. The intention of contingent buildings indemnity insurance is to grant indemnity in respect of the risks set out in the policy schedule - so it’s important to check the document to determine that it is correct. The duration of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.Important features and benefits of contingent buildings Contingency insurance :
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the contingent buildings indemnity insurance schedule. Contingent Buildings indemnity insurance Policies are likely to cover the following- Liability for damages or compensation incurred in any proceedings in respect of the risks specified in the contingent buildings indemnity insurance, including solicitors charges.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, before the commencement of proceedings for the enforcement of the risks specified in the contingent buildings insurance, to the extent that such costs are rendered abortive by court order.
- The out of pocket expenses 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.
- Loss in market value due to the successful enforcement of the risks specified in the contingent buildings indemnity insurance.
- Money paid with consent in writing from the insurance company to liberate the land from the risks specified in the contingent buildings policy.
Due diligence should extend to checking that the answers on the application form are accurate. Regardless of how remote a claim on the lender insurance policy might be you can certain that the insurer will check the details on any proposal form thoroughly before any claim is admitted.
Additional considerations for contingent buildings indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from contingent buildings insurance may be adequate for your client. Information provided on this webpage is for general information for conveyancers and solicitors in England and Wales on the the bank conveyancing 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 contingent buildings 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 is in relation to properties in England and Wales.