Indemnity Insurance of Good Leasehold Title Lender conveyancing requirements
Godiva Mortgages and Skipton, in common with many mortgage companies, dictate their own specific instructions when it comes to good leasehold title indemnity insurance. This page sets out to enlighten residential conveyancing lawyers on the different bank conveyancing panel where the title to be charged includes good leasehold title. It is not a substitute for checking the CML handbook requirements for each bank, be it Halifax, Accord or Natwest. The content on this page Is not to be read as good leasehold title indemnity insurance advice.
Need help with good leasehold title indemnity insurance from your lender?
Barnsley BS and HSBC in common with most lenders, obligations require that where good leasehold title indemnity insurance is effected:
- your practice must point out to the mortgagor that the borrower will need to comply with any conditions of the good leasehold title indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in relation to the insurance
- the good leasehold title indemnity insurance policy must be for the benefit of the mortgage company and, if possible, for the benefit of the borrower and any next owner or mortgage company. If the mortgagor will not be protected by the good leasehold title indemnity insurance policy, you must advise the mortgagor of this fact.
- your practice must approve the terms of the good leasehold title policy on behalf of the bank
- your firm 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 a further policy could be mandatory if there is supplemental borrowing against the security of the property
- the good leasehold title indemnity insurance policy should be placed on risk at no cost to the lender
- your practice is required to disclose to the insurer all relevant information which you have gathered
- the good leasehold title indemnity insurance policy should not contain conditions that you know would invalidate or prejudice the interests of the mortgage company
- the minimum level of cover for the policy must satisfy the requirements for the bank (See Part II Handbook requirements )
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| 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. |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Harpenden Building Society | 110% of mortgage advance |
| 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. |
| Investec | The open market value of the property according to the valuation report. |
| Kensington Mortgage | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| National Westminster Bank | An amount equal to the value of the property. |
| 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). |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| Royal Bank of Scotland | An amount equal to the value of the property. |
| RBS - Direct Line One | An amount equal to the value of the property. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
General Good Leasehold Title indemnity insurance points to consider
The full terms, conditions and exclusions for good leasehold title indemnity insurance are identified in the policy paperwork. Conveyancing Practitioners should direct the borrower to the good leasehold title indemnity insurance policy itself. Good Leasehold Title indemnity insurance is devised to provide indemnity in respect of the risks set out in the policy schedule - so it’s important to check the schedule to determine that 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. It is well worth checking that the time frame is correct.Good Leasehold Title indemnity insurance: Significant characteristics and benefits:
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the good leasehold title indemnity insurance schedule. Good Leasehold Title indemnity insurance Policies should be checked for the following- Cover for compensation incurred in any proceedings concerning the risks specified in the good leasehold title policy, including legal and associated costs.
- Market value reduction due to the successful enforcement of the risks specified in the good leasehold title policy.
- Money paid with consent in writing from the insurance company to liberate the land from the risks specified in the good leasehold title 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.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- 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 good leasehold title insurance, to the extent that such costs are rendered abortive by court order.
Don't forget to consider what is not included in the good leasehold title policy e.g. does the policy cover any property that has been altered within the 12 months prior to the commencement of the policy? Does it cover legal costs?
Other considerations for good leasehold title indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from good leasehold title insurance may be adequate for your client. Information provided on this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company solicitor panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the lender 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 covers to properties in England and Wales.