Lender conveyancing panel requirements re Forfeiture of Superior lease Indemnity Insurance
Halifax and RBS, as with most lenders, have their own specific instructions when it comes to forfeiture of superior lease indemnity insurance. This page sets out to enlighten property law firms on the numerous bank solicitors panel where the title for the the property to be mortgaged includes forfeiture of superior lease. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each bank, for example Santander, Bank of Scotland or Lloyds TSB. 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?
Accord and Godiva Mortgages in common with the majority of lenders, obligations require that where forfeiture of superior lease indemnity insurance is to be taken out:
- you are responsible for approving the terms of the forfeiture of superior lease policy on behalf of the lender
- your firm must disclose to the insurer all relevant information which you have obtained
- the forfeiture of superior lease indemnity insurance policy should always be in favor of the bank and, if possible, for the benefit of the borrower and any future owner or lender. Where the borrower will not be protected by the forfeiture of superior lease indemnity insurance policy, the mortgagor needs to 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 explain 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 mortgagor should notify the bank of any notice or potential claim in relation to the policy
- your practice must supply 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 may be required if there is further borrowing against the mortgaged property
- the forfeiture of superior lease indemnity insurance policy must not contain conditions which you know would void or compromise the interests of the lender
- the minimum level of cover for the policy must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
| 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. |
| Adam & Company | The open market value of the property according to the valuation report. |
| Aviva Equity Release | Full value of the property. |
| Bluestone Mortgages | 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. |
| Coutts Finance | The open market value of the property according to the valuation report. |
| Ecology Building Society | An amount equal to at least 110% of the mortgage advance |
| Halifax | An amount at least equal to the mortgage advance. |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Holmesdale Building Society | 110% |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the 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. |
| 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. |
| Rely Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| RBS - Direct Line | An amount equal to the value of the property. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| Ulster Bank | An amount equal to the value of the property. |
General Forfeiture of Superior lease indemnity insurance points to consider
The extent of the terms for forfeiture of superior lease indemnity insurance are explained in the policy document. Property lawyers are obliged to direct the borrower to the forfeiture of superior lease indemnity insurance policy paperwork. Forfeiture of Superior lease indemnity insurance is devised to afford indemnity in respect of the risks set out in the policy schedule - so it is essential check any draft to ensure it is correct. The duration of this non-investment insurance agreement is in perpetuity unless otherwise stated in the forfeiture of superior lease indemnity insurance policy. Again, please check that this is as you expected.Forfeiture of Superior lease indemnity insurance: Significant characteristics 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 should be checked for the following- The cost of works (including professional 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 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.
- Loss in market value resulting from the successful enforcement of the risks specified in the forfeiture of superior lease indemnity insurance.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- Money paid with consent in writing from the insurance company to liberate the land from the risks specified in the forfeiture of superior lease insurance.
- Liability for damages or compensation incurred in any action concerning the risks specified in the forfeiture of superior lease policy, including solicitors charges.
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.
Further considerations for forfeiture of superior lease indemnity insurance
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. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the lender 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 content set out above covers to properties in England and Wales.