Indemnity Insurance of Forfeiture of Superior lease Bank conveyancing obligations
Chelsea BS and Barnsley BS, like many lenders, dictate their own requirements when it comes to forfeiture of superior lease indemnity insurance. The content herein aims to help conveyancing practitioners on the various bank solicitors panel where the title for the the property to be mortgaged incorporates forfeiture of superior lease. Solicitors should still check the CML handbook requirements for each bank, whether it be Halifax, Nationwide or Accord. The content on this page Is not to be read as forfeiture of superior lease indemnity insurance advice.
Need help with forfeiture of superior lease indemnity insurance from your lender?
Natwest and Bank of Scotland like many lenders, obligations require that where forfeiture of superior lease indemnity insurance is to be put on risk:
- your firm is duty bound to spell out to the borrower 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 relation to the insurance
- your practice are responsible for approving the terms of the forfeiture of superior lease policy on behalf of the lender
- your practice is obliged to reveal to the insurer all relevant information which you have acquired
- the forfeiture of superior lease indemnity insurance policy must be in favor of the lender and, wherever possible, for the benefit of the mortgagor and any subsequent owner or mortgage company. Where the borrower will not be protected by the forfeiture of superior lease indemnity insurance policy, the borrower needs to be advised accordingly.
- your practice must supply a copy of the forfeiture of superior lease indemnity insurance to the borrower and explain to the mortgagor why the forfeiture of superior lease indemnity insurance policy was effected and that additional insurance may be required if there is additional lending against the security of the property
- the forfeiture of superior lease indemnity insurance policy should be effected at no expense to the lender
- the minimum level of cover for the policy must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- the forfeiture of superior lease indemnity insurance policy should not incorporate terms which you recognise would invalidate or prejudice the interests of the bank
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Aldermore Bank | 110% of the purchase price or valuation, whichever is greater. 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). Where a property is being sold at undervalue and an equity gift is being provided, the conveyancer must ensure the seller obtains an Insolvency Act Indemnity Insurance Policy and provides evidence to you, so that you are comfortable an appropriate policy is in place to Aldermore’s satisfaction. This indemnity insurance aims to cover Aldermore against any future claims by creditors of the seller that may challenge the sale. |
| Allied Irish Bank | At least the amount of the mortgage advance. |
| Britannia | Cover to the full value of the property. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Halifax | An amount at least equal to the mortgage advance. |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| Masthaven Bank | 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. |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| 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. |
| New Street Mortgages | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| The Mortgage Works | The full purchase price/value of the property whichever is higher |
| RBS - Direct Line One | An amount equal to the value of the property. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
Non lender-specific considerations
The full terms, conditions and exclusions for forfeiture of superior lease indemnity insurance are shown in the policy document. Conveyancing Practitioners are obliged to point the borrower to the forfeiture of superior lease indemnity insurance policy itself. Forfeiture of Superior lease indemnity insurance is devised to provide indemnity in respect of the risks set out in the policy schedule - so it’s important to check any draft to ensure it is correct. The continuance 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 aspects and benefits of forfeiture of superior lease indemnity 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- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- Cover for compensation incurred in any proceedings regarding the risks specified in the forfeiture of superior lease insurance, including solicitors charges.
- Loss in market value resulting from the successful enforcement of the risks specified in the forfeiture of superior lease policy.
- 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.
- Money paid with the written consent of the insurance company to free the land from the risks specified in the forfeiture of superior lease policy.
- Expenses for works (including professional fees) for the purpose of the development commenced, before the commencement of 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.
As is the case with all conventional insurance, 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 be invalidated.
Forfeiture of Superior lease Indemnity Insurance has limitations - Other considerations
Forfeiture of Superior lease insurance may satisfy lenders such as Coventry BS or Virgin Money 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. Information contained within 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 above information covers to properties in England and Wales.