Forfeiture of Superior lease Indemnity Insurance Mortgage Company conveyancing requirements
Coventry BS and Halifax, like the majority of banks, dictate their own requirements when it comes to forfeiture of superior lease indemnity insurance. The content herein aims to help residential conveyancing firms on the various bank approved list of panel lawyers where the title for the the property to be mortgaged includes forfeiture of superior lease. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each bank, whether it be HSBC, RBS or Yorkshire Bank Home Loans. 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?
Nationwide and Barclays as with many mortgage companies, instructions are such that where forfeiture of superior lease indemnity insurance is to be put on risk:
- your firm must approve the terms of the forfeiture of superior lease policy on behalf of the lender
- your practice must provide a duplicate of the forfeiture of superior lease indemnity insurance to the borrower 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 security of the property
- the forfeiture of superior lease indemnity insurance policy must be for the benefit of the mortgage company and, if possible, for the benefit of the borrower and any subsequent registered proprietor or mortgage company. If the mortgagor will not be protected by the forfeiture of superior lease indemnity insurance policy, the borrower must be informed accordingly.
- the forfeiture of superior lease indemnity insurance policy should not contain terms that you are aware would void or compromise the interests of the bank
- the limit of indemnity must meet the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
- your firm is duty bound to point out to the mortgagor 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 respect of the insurance
- your firm is required to reveal to the insurer all relevant information which you have gathered
- the forfeiture of superior lease indemnity insurance policy must be placed on risk without cost to the bank
| 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. |
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| Bradford & Bingley | Amount of loan + 15% |
| 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. |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| Family Building Society | An amount at least equal to the mortgage advance. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Hodge Equity Release | 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. |
| 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. |
| Manchester Building Society | Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%. |
| 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. |
| Pepper Money | An amount equal to at least 110% of 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 and also the borrower(s). |
| Principality Building Society | Full market value of the property is preferred but if this is not available we will accept the loan advance amount as minimum. You must approve the policy on our behalf. The estimated property value is stated in the Mortgage Offer in remortgage cases. Otherwise it will be stipulated in the 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). |
| Scottish Widows | The value of the property. |
| St James Place | 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. |
| RBS - Direct Line One | 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 |
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 document. Conveyancing solicitors should point your non-lender client to the forfeiture of superior lease indemnity insurance policy document. 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 schedule to ensure it is in order. The duration of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.Important features and benefits of forfeiture of superior lease indemnity insurance :
The insurance 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- The out of pocket expenses 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.
- Cover for compensation incurred in any action in respect of the risks specified in the forfeiture of superior lease policy, as well as legal and associated costs.
- 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 policy, to the extent that such costs are rendered abortive by court decision.
- Loss in market value due to the successful enforcement of the risks specified in the forfeiture of superior lease indemnity insurance.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- All sums paid with the written consent of the insurance company to free the land from the risks specified in the forfeiture of superior lease insurance.
Always 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? Does it cover legal costs?
Forfeiture of Superior lease Indemnity Insurance has limitations - Other considerations
Forfeiture of Superior lease insurance may satisfy lenders such as Lloyds TSB or Santander 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 conveyancing 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 content set out above covers to properties in England and Wales.