Lender conveyancing panel conditions re Contingent Buildings Indemnity Insurance

Santander and Chelsea BS, as with most mortgage companies, dictate their own requirements when it comes to contingent buildings indemnity insurance. The purpose of this page to assist residential conveyancing solicitors on the various bank conveyancing panel where the title to be charged incorporates contingent buildings. Lawyers are advised to familiarise themselves with the CML handbook requirements for each lender, whether it be Barnsley BS, Nationwide or Virgin Money. The content on this page is not focused on contingent buildings indemnity insurance requirements.

Need help with contingent buildings indemnity insurance from your lender?

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Leeds Building Society and Skipton as with the majority of lenders, requirements are that where contingent buildings indemnity insurance is effected:

• the contingent buildings indemnity insurance policy must not incorporate terms which you know would invalidate or prejudice the interests of the bank
• you is required to reveal to the insurer all relevant information which you have obtained
• the contingent buildings indemnity insurance policy needs to be in favor of the mortgage company and, wherever possible, for the benefit of the borrower and any next registered proprietor or bank. If the borrower will not be protected by the contingent buildings indemnity insurance policy, you must advise the borrower of this fact.
• the limit of indemnity must meet the requirements for the lender (See Part II Handbook requirements )
• your firm must approve the terms of the contingent buildings policy on behalf of the bank
• the contingent buildings indemnity insurance policy must be placed on risk without cost to the mortgage company
• your firm must supply a duplicate of the contingent buildings indemnity insurance to the mortgagor and explain to the mortgagor why the contingent buildings indemnity insurance policy was effected and that additional insurance may be mandatory if there is additional lending against the mortgaged property
• you must spell out to the borrower that the borrower will need to adhere to any conditions of the contingent buildings indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in relation to the policy

As to the level of cover for the contingent buildings indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Section 9.2 of the Part 2 requirements for banks:

Contingent Buildings Contingency Insurance : Reflections

The full terms, conditions and exclusions for contingent buildings indemnity insurance are explained in the policy document. Conveyancing solicitors should point the borrower to the contingent buildings indemnity insurance policy paperwork. The intention of contingent buildings indemnity insurance is to provide indemnity in respect of the risks specified in the policy schedule - so it is essential check any draft to ensure it is in order. 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.

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Important aspects and benefits of contingent buildings 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. Contingent Buildings indemnity insurance Policies should be checked for the following

• The cost of works (including professional 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 indemnity insurance, to the extent that such costs are rendered abortive by court decision.
• 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 liberate the property from the risks specified in the contingent buildings insurance.
• Loss in market value resulting from the successful enforcement of the risks specified in the contingent buildings indemnity insurance.
• The cost of altering or demolishing 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.
• Liability for damages or compensation incurred in any proceedings concerning the risks specified in the contingent buildings indemnity insurance, including incurred costs and expenses.

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As with any insurance policy, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the contingent buildings policy will be invalidated.

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Contingent Buildings Indemnity Insurance has limitations - Further considerations

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.

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The above information covers to properties in England and Wales.