Good Leasehold Title Indemnity Insurance Bank conveyancing requirements
Yorkshire Bank Home Loans and Barclays, like many lenders, dictate their own requirements when it comes to good leasehold title indemnity insurance. The purpose of this page to assist conveyancing firms on the different bank conveyancing panel where the title for the the property to be mortgaged incorporates good leasehold title. Lawyers are advised to familiarise themselves with the CML handbook requirements for each mortgage company, be it Yorkshire Building Society, Virgin Money or Natwest. The content on this page is not focused on good leasehold title indemnity insurance requirements.
Need help with good leasehold title indemnity insurance from your lender?
Santander and Coventry BS like most lenders, obligations require that where good leasehold title indemnity insurance is to be put on risk:
- the good leasehold title indemnity insurance policy must not contain conditions that you know would void or prejudice the interests of the lender
- your practice must approve the terms of the good leasehold title policy on behalf of the mortgage company
- you must send a duplicate of the good leasehold title indemnity insurance to the borrower and explain to the mortgagor why the good leasehold title indemnity insurance policy was effected and that additional insurance might be required if there is further borrowing against the security of the property
- the limit of indemnity must meet the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
- your practice must spell out to the mortgagor that the borrower must comply with any conditions of the good leasehold title indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in relation to the insurance
- the good leasehold title indemnity insurance policy needs to be in favor of the mortgage company and, if possible, for the benefit of the mortgagor and any next owner or lender. Where the mortgagor will not be protected by the good leasehold title indemnity insurance policy, you must advise the borrower of this fact.
- the good leasehold title indemnity insurance policy must be effected without charge to the mortgage company
- you must disclose to the insurer all relevant information which you have acquired
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Coventry Building Society | Minimum of the value of the property. |
| Ecology Building Society | An amount equal to at least 110% of the mortgage advance |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Habito | Higher of purchase price or valuation |
| Halifax | An amount at least equal to the mortgage advance. |
| Hinckley and Rugby | The policy must be for our benefit and for no less than the amount lent to the borrower, including retentions, stage payments and interest. |
| 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. |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| Mortgage Express (No 2) | [This lender has not published an answer to this question. Please contact the lender.]
|
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Reliance Bank | \xA31,000,000.00 |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| 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 |
| Yorkshire 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. |
General Good Leasehold Title indemnity insurance points to consider
The full terms, conditions and exclusions for good leasehold title indemnity insurance are shown in the policy paperwork. Conveyancing solicitors should point the borrower to the good leasehold title indemnity insurance policy paperwork. Good Leasehold Title indemnity insurance is devised to grant indemnity in respect of the risks specified in the policy schedule - so it’s important to check the document to ensure it is correct. The lifetime of this non-investment insurance agreement is in perpetuity unless otherwise stated in the good leasehold title indemnity insurance policy. Again, please check that this is as you expected.Good Leasehold Title 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. Good Leasehold Title indemnity insurance Policies should be checked for the following- Diminution in value due to the successful enforcement of the risks specified in the good leasehold title policy.
- Liability for damages or compensation incurred in any proceedings concerning the risks specified in the good leasehold title policy, including legal and associated costs.
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, before the commencement of proceedings for the enforcement of the risks specified in the good leasehold title indemnity insurance, to the extent that such costs are rendered abortive by court decision.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- 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.
- All sums paid with the written consent of the insurance company to liberate the property from the risks specified in the good leasehold title indemnity insurance.
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 good leasehold title policy will be invalidated.
Other considerations for good leasehold title indemnity insurance
Good Leasehold Title Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that good leasehold title indemnity cover will not necessarily be the right solution. Information provided on 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 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 good leasehold title 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 is in relation to properties in England and Wales.