Indemnity Insurance of Forfeiture of Superior lease Lender conveyancing obligations
Natwest and Barnsley BS, like most mortgage companies, set their own requirements when it comes to forfeiture of superior lease indemnity insurance. This page is designed to help residential conveyancing solicitors on the different lender conveyancing panel where the title to be charged contains forfeiture of superior lease. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each lender, be it Nationwide, Chelsea BS or Yorkshire Building Society. The information 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?
Birmingham Midshires and Halifax as with most lenders, requirements are that where forfeiture of superior lease indemnity insurance is to be put on risk:
- you is obliged to disclose to the insurer all relevant information which you have acquired
- your practice is duty bound to point out to the borrower that the borrower must adhere to any conditions of the forfeiture of superior lease indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the policy
- the forfeiture of superior lease indemnity insurance policy must not incorporate conditions that you recognise would invalidate or prejudice the interests of the lender
- the minimum level of cover for the policy must satisfy the requirements for the mortgage company (See Part II Handbook requirements )
- your practice must send 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 a further policy might be necessary if there is additional lending against the security of the property
- the forfeiture of superior lease indemnity insurance policy must be effected without charge to the mortgage company
- the forfeiture of superior lease indemnity insurance policy must be in favor of the bank and, if possible, for the benefit of the mortgagor and any subsequent owner or bank. If the borrower will not be covered by the forfeiture of superior lease indemnity insurance policy, the borrower should be informed accordingly.
- your firm must approve the terms of the forfeiture of superior lease policy on behalf of the mortgage company
| Lender | Requirement |
|---|---|
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Britannia | Cover to the full value of the property. |
| Chelsea 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. |
| Clydesdale Bank | Open market value of property. |
| Coutts & Co | The open market value of the property according to the valuation report. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| GE Money | GE Money Home Lending has withdrawn from the UK mortgage market. |
| Habito | Higher of purchase price or valuation |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Hodge | An amount equal to the purchase price or value, whichever is higher. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage, the borrower(s) and any successor in Title. |
| Leeds Building Society | An amount at least equal to the amount of the mortgage advance plus 10%. Any indemnity insurance policy must protect the borrowers, any successor in title and any Mortgagee. |
| Lloyds | The value of the property. |
| Metro Bank | The open market value of the property according to the valuation report. |
| 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 Westminster Bank | An amount equal to the value of the property. |
| Nedbank | You are to refer to us for specific instructions on any matter involving indemnity insurance. |
| Platform | 110% of principal sum. |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| RBS (One Account) | An amount equal to the value of the property. |
Forfeiture of Superior lease Contingency Insurance : Reflections
The extent of the terms for forfeiture of superior lease indemnity insurance are explained in the policy paperwork. Conveyancing Practitioners are obliged to point your non-lender client to the forfeiture of superior lease indemnity insurance policy paperwork. Forfeiture of Superior lease indemnity insurance is designed to provide indemnity in respect of the risks set out in the policy schedule - so you should check the document to ensure it is as it should be. The duration of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.Significant features and benefits of forfeiture of superior lease Contingency insurance :
The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the forfeiture of superior lease indemnity insurance schedule. Forfeiture of Superior lease indemnity insurance Cover normally includes- Loss in market value 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 consent in writing from the relevant insurer
- All sums paid with consent in writing from the insurance company to liberate the land from the risks specified in the forfeiture of superior lease indemnity insurance.
- The out of pocket expenses 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.
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development started, 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 order.
- Cover for 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.
Don't forget to check what is not included in the forfeiture of superior lease insurance e.g. does the policy cover any property that has been altered within the year prior to the policy being put on risk? Are legal costs covered?
Further considerations for forfeiture of superior lease indemnity insurance
Forfeiture of Superior lease Indemnity insurance isn’t a solution to all of the relevant problems. Information provided on this webpage is for general information for conveyancers and solicitors in England and Wales on the the bank solicitor panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the mortgage company 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 above information is in relation to properties in England and Wales.