Lender conveyancing panel conditions re Forfeiture of Lease Indemnity Insurance
Santander and Barnsley BS, in common with many lenders, dictate their own specific instructions when it comes to forfeiture of lease indemnity insurance. The content herein aims to help domestic conveyancing lawyers on the various bank solicitors panel where the title for the the property to be mortgaged incorporates forfeiture of lease. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each bank, be it Skipton, Nationwide or Godiva Mortgages. The content on this page Is not to be read as forfeiture of lease indemnity insurance advice.
Need help with forfeiture of lease indemnity insurance from your lender?
Birmingham Midshires and HSBC as with many lenders, requirements are that where forfeiture of lease indemnity insurance is effected:
- you must supply a copy of the forfeiture of lease indemnity insurance to the mortgagor and explain to the borrower why the forfeiture of lease indemnity insurance policy was effected and that additional insurance could be required if there is additional lending against the mortgaged property
- the forfeiture of lease indemnity insurance policy must not contain conditions that you know would void or compromise the interests of the mortgage company
- the limit of indemnity must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- the forfeiture of lease indemnity insurance policy should always be for the benefit of the lender and, wherever possible, in favour of the mortgagor and any next registered proprietor or lender. If the mortgagor will not be protected by the forfeiture of lease indemnity insurance policy, you must advise the borrower of this fact.
- your firm are responsible for approving the terms of the forfeiture of lease policy on behalf of the lender
- the forfeiture of lease indemnity insurance policy should be effected without cost to the mortgage company
- you must point out to the mortgagor that the borrower must comply with any conditions of the forfeiture of lease indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in relation to the insurance
- your firm must disclose to the insurer all relevant information which you have acquired
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| Atom Bank | At least the open market value of the property according to the valuation report. |
| Aviva Equity Release | Full value of the property. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Bank of Scotland Private | Not less than the Facility plus 10%. |
| Bradford & Bingley | Amount of loan + 15% |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Coventry Building Society | Minimum of the value of the property. |
| Harpenden Building Society | 110% of mortgage advance |
| Landmark | 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. |
| 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. |
| Molo Finance 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 mortgages. |
| Mortgage Express (No 2) | [This lender has not published an answer to this question. Please contact the lender.]
|
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Saffron Building Society | Higher of purchase price or valuation. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage and also the borrower(s). |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| Ulster Bank | An amount equal to the value of the property. |
Non lender-specific considerations
The full terms, conditions and exclusions for forfeiture of lease indemnity insurance are identified in the policy paperwork. Property lawyers should direct your non-lender client to the forfeiture of lease indemnity insurance policy itself. The intention of forfeiture of lease indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so it’s important to check the schedule to ensure it is as it should be. The lifetime of this non-investment insurance contract is in perpetuity unless otherwise stated in the forfeiture of lease indemnity insurance policy. Again, please check that this is as you expected.Forfeiture of Lease Contingency insurance: Important aspects and benefits:
The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the forfeiture of lease indemnity insurance schedule. Forfeiture of Lease indemnity insurance Policies are likely to cover the following- Loss in market value due to the successful enforcement of the risks specified in the forfeiture of lease policy.
- Liability for damages or compensation incurred in any proceedings concerning the risks specified in the forfeiture of lease policy, as well as legal and associated costs.
- The cost of 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 forfeiture of lease indemnity insurance, to the extent that such costs are rendered abortive by court decision.
- 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.
- All sums paid with consent in writing from the insurance company to liberate the land from the risks specified in the forfeiture of lease indemnity insurance.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
Don't forget to consider what is excluded from the forfeiture of lease 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?
Forfeiture of Lease Indemnity Insurance has limitations - Additional considerations
Forfeiture of Lease Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that forfeiture of lease indemnity cover will not necessarily be the right solution. Content on this webpage is for general information for conveyancers and solicitors in England and Wales on the the mortgage company conveyancing 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 forfeiture of lease 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.