Bank conveyancing panel conditions re Forfeiture of Superior lease Indemnity Insurance
Barclays and HSBC, in common with many lenders, set their own specific instructions when it comes to forfeiture of superior lease indemnity insurance. This page sets out to enlighten conveyancing solicitors on the various mortgage company conveyancing panel where the title to be charged includes forfeiture of superior lease. Solicitors should still check the CML handbook requirements for each mortgage company, be it Lloyds TSB, Coventry BS or Skipton. The content on this page is not focused on forfeiture of superior lease indemnity insurance requirements.
Need help with forfeiture of superior lease indemnity insurance from your lender?
RBS and Accord like most lenders, instructions are such that where forfeiture of superior lease indemnity insurance is to be put on risk:
- your practice is duty bound to point out to the mortgagor that the borrower is obliged to comply with any conditions of the forfeiture of superior lease indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in respect of the insurance
- your firm are responsible for approving the terms of the forfeiture of superior lease policy on behalf of the mortgage company
- the forfeiture of superior lease indemnity insurance policy needs to be in favor of the lender and, wherever possible, for the benefit of the borrower and any subsequent registered proprietor or lender. If the borrower will not be protected by the forfeiture of superior lease indemnity insurance policy, the mortgagor should be informed accordingly.
- the forfeiture of superior lease indemnity insurance policy should be effected at no charge to the bank
- the level of indemnity must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- your practice must supply a copy of the forfeiture of superior lease indemnity insurance to the mortgagor and explain to the borrower why the forfeiture of superior lease indemnity insurance policy was effected and that additional insurance may be necessary if there is further lending against the security of the property
- the forfeiture of superior lease indemnity insurance policy must not incorporate terms which you recognise would void or prejudice the interests of the bank
- your practice is obliged to reveal to the insurer all relevant information which you have obtained
| Lender | Requirement |
|---|---|
| Accord 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 mortgagee. |
| Atom Bank | At least the open market value of the property according to the valuation report. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Barnsley 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. |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| Britannia | Cover to the full value of the property. |
| Clydesdale Bank | Open market value of property. |
| Cynergy Bank | The market value of the property. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| Intelligent Finance | 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. |
| 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. |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| Mortgage Express | Amount of loan + 15% |
| NRAM Ltd | 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. |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| National Westminster Bank | An amount equal to the value of the property. |
| Paratus | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Perenna | The higher of the purchase price or valuation. |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
Non lender-specific considerations
The extent of the terms for forfeiture of superior lease indemnity insurance are identified in the policy paperwork. Conveyancing solicitors should point the borrower to the forfeiture of superior lease indemnity insurance policy document. The intention of forfeiture of superior lease indemnity insurance is to afford 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 the policy says something to the contrary. Adequacy in this regard should be checked.Forfeiture of Superior lease Contingency insurance: Significant features and benefits:
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. Forfeiture of Superior lease indemnity insurance Policies are likely to cover the following- Market value reduction resulting from the successful enforcement of the risks specified in the forfeiture of superior lease insurance.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Money paid with consent in writing from the insurance company to liberate the property from the risks specified in the forfeiture of superior lease indemnity insurance.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development commenced, prior to proceedings for the enforcement of the risks specified in the forfeiture of superior lease insurance, to the extent that such costs are rendered abortive by court decision.
- 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.
- Liability for damages or compensation incurred in any proceedings in respect of the risks specified in the forfeiture of superior lease policy, as well as legal and associated costs.
Always check what is excluded from the forfeiture of superior lease policy e.g. does the policy cover any property that has been altered within the 12 months prior to the policy being put on risk? Are legal costs covered?
Forfeiture of Superior lease Indemnity Insurance has limitations - Additional considerations
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from forfeiture of superior lease insurance may be adequate for your client. Content on this webpage is for general information for Regulated law firms in England and Wales on the the lender 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 forfeiture of superior 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.