Mortgage Company conveyancing panel requirements re Forfeiture of Lease Indemnity Insurance
Coventry BS and Godiva Mortgages, like most lenders, set their own requirements when it comes to forfeiture of lease indemnity insurance. The content herein aims to help residential conveyancing solicitors on the different lender approved list of panel lawyers where the title to be charged incorporates forfeiture of lease. It is not a substitute for checking the CML handbook requirements for each lender, be it Santander, Skipton or Yorkshire Bank Home Loans. The information on this page is not focused on forfeiture of lease indemnity insurance requirements.
Need help with forfeiture of lease indemnity insurance from your lender?
HSBC and Nationwide as with many banks, obligations require that where forfeiture of lease indemnity insurance is effected:
- the forfeiture of lease indemnity insurance policy must not incorporate terms which you know would void or compromise the interests of the mortgage company
- the forfeiture of lease indemnity insurance policy needs to be in favor of the bank and, wherever possible, for the benefit of the borrower and any future owner or mortgage company. If the borrower will not be protected by the forfeiture of lease indemnity insurance policy, you must advise the mortgagor of this fact.
- you are responsible for approving the terms of the forfeiture of lease policy on behalf of the mortgage company
- your practice is obliged to disclose to the insurer all relevant information which you have acquired
- your practice must send a duplicate of the forfeiture of lease indemnity insurance to the borrower and explain to the mortgagor why the forfeiture of lease indemnity insurance policy was effected and that a further policy could be required if there is further lending against the security of the property
- the minimum level of cover for the policy must satisfy the requirements for the lender (See Part II Handbook requirements )
- the forfeiture of lease indemnity insurance policy should be placed on risk without cost to the lender
- your firm is duty bound to point out to the borrower that the borrower must comply with any conditions of the forfeiture of lease indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the insurance
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Bank of Scotland Private | [This lender has not published an answer to this question. Please contact the lender.]
|
| Barclays plc | Higher of purchase price or valuation |
| Bluestone Mortgages | 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. |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| Halifax | An amount at least equal to the mortgage advance. |
| JPMorgan | 110% of principal sum. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| 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. |
| Legal & General Home Finance | The policy should be for the full market value of the property and indexed linked. The policy must be for our benefit, and for the benefit of the borrower where available. The policy must benefit all successors and assigns. |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Paratus | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| 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). |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| TSB | The value of the property |
| RBS - Direct Line | An amount equal to the value of the property. |
| Ulster Bank | An amount equal to the value of the property. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
| Yorkshire Building Society | 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. |
Non lender-specific considerations
The full terms, conditions and exclusions for forfeiture of lease indemnity insurance are explained in the policy paperwork. Conveyancing Practitioners should point your non-lender client to the forfeiture of lease indemnity insurance policy paperwork. Forfeiture of Lease Contingency insurance is devised to grant indemnity in respect of the risks set out in the policy schedule - so it’s important to check any draft to ensure it is in order. The continuance of this non-investment insurance agreement is in perpetuity unless otherwise stated in the forfeiture of lease indemnity insurance policy. Adequacy in this regard should be checked.Forfeiture of Lease indemnity insurance: Significant aspects and benefits:
The insurance 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 Cover normally includes- Money paid with consent in writing from the insurance company to liberate the property from the risks specified in the forfeiture of lease policy.
- Diminution in value resulting from the successful enforcement of the risks specified in the forfeiture of lease policy.
- Liability for damages or compensation incurred in any action regarding the risks specified in the forfeiture of lease insurance, as well as legal and associated costs.
- Expenses for 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 forfeiture of lease policy, to the extent that such costs are rendered abortive by court decision.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- 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.
Don't forget to consider what is not included in the forfeiture of lease indemnity insurance e.g. does the policy cover any residence that has been altered within the year prior to the policy being put on risk? Does it cover legal costs?
Supplemental considerations for forfeiture of lease indemnity insurance
Forfeiture of Lease insurance may satisfy lenders such as RBS or Barnsley BS and prevent clients from from suffering financially but it cannot compensate for the stress and inconvenience the emotional suffering - after all the value of a home cannot always be measured in cash in the eyes of the owner. Content on 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 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 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 above information covers to properties in England and Wales.