Lender conveyancing panel conditions re Forfeiture of Superior lease Indemnity Insurance

Yorkshire Building Society and Coventry BS, as with many mortgage companies, set their own requirements when it comes to forfeiture of superior lease indemnity insurance. The content herein aims to help conveyancing practitioners on the numerous bank approved list of panel lawyers where the title to be charged incorporates forfeiture of superior lease. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each bank, whether it be Accord, Natwest or Santander. 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?

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Yorkshire Bank Home Loans and Lloyds TSB as with the majority of mortgage companies, instructions are such that where forfeiture of superior lease indemnity insurance is to be put on risk:

• your practice is obliged to reveal to the insurer all relevant information which you have gathered
• the forfeiture of superior lease indemnity insurance policy must not incorporate terms which you are aware would invalidate or compromise the interests of the bank
• the level of indemnity must meet the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
• the forfeiture of superior lease indemnity insurance policy should always be in favor of the lender and, if possible, for the benefit of the mortgagor and any future registered proprietor or mortgage company. Where the borrower will not be protected by the forfeiture of superior lease indemnity insurance policy, the mortgagor must be advised accordingly.
• the forfeiture of superior lease indemnity insurance policy should be effected without expense to the mortgage company
• you is duty bound to point out to the mortgagor that the borrower will need to comply with any conditions of the forfeiture of superior lease indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in relation to the policy
• you are responsible for approving the terms of the forfeiture of superior lease policy on behalf of the mortgage company
• you must send a duplicate 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 might be necessary if there is additional borrowing against the mortgaged property

Regarding the extent of cover for the forfeiture of superior lease indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Paragraph 9.2 of the Part 2 requirements for banks:

Forfeiture of Superior lease Contingency Insurance : Reflections

The full terms, conditions and exclusions for forfeiture of superior lease indemnity insurance are shown in the policy paperwork. Property lawyers are obliged to direct your non-lender client to the forfeiture of superior lease indemnity insurance policy itself. The intention of forfeiture of superior lease indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so you should check the document to determine that it is correct. The continuance of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.

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Important features and benefits of forfeiture of superior lease indemnity 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. Forfeiture of Superior lease indemnity insurance Cover normally includes

• All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
• The cost of works (including architects’ and surveyors’ fees) for the purpose of the development started, before the commencement of proceedings for the enforcement of the risks specified in the forfeiture of superior lease indemnity insurance, to the extent that such costs are rendered abortive by court order.
• Loss in market value due to the successful enforcement of the risks specified in the forfeiture of superior lease indemnity insurance.
• Money paid with consent in writing from the insurance company to free the land from the risks specified in the forfeiture of superior lease insurance.
• Reimbursement for compensation incurred in any proceedings in respect of the risks specified in the forfeiture of superior lease insurance, as well as solicitors charges.
• The cost of altering or destroying 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.

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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 forfeiture of superior lease policy will not be valid.

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Forfeiture of Superior lease Indemnity Insurance has limitations - Supplemental considerations

Forfeiture of Superior lease insurance may satisfy lenders such as HSBC 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.

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The content set out above is in relation to properties in England and Wales.