Good Leasehold Title Indemnity Insurance Mortgage Company conveyancing requirements
Coventry BS and Nationwide, in common with the majority of lenders, set their own specific instructions when it comes to good leasehold title indemnity insurance. This page is designed to help property law practitioners on the various mortgage company solicitors panel where the title for the the property to be mortgaged includes good leasehold title. It is not a substitute for checking the CML handbook requirements for each bank, be it Chelsea BS, Godiva Mortgages or Skipton. The information on this page is not focused on good leasehold title indemnity insurance requirements.
Need help with good leasehold title indemnity insurance from your lender?
HSBC and Barnsley BS as with many mortgage companies, instructions are such that where good leasehold title indemnity insurance is to be taken out:
- your practice must spell out to the borrower that the borrower will need to adhere to any conditions of the good leasehold title indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in respect of the insurance
- the good leasehold title indemnity insurance policy needs to be for the benefit of the bank and, if possible, in favour of the mortgagor and any future owner or mortgage company. Where the borrower will not be covered by the good leasehold title indemnity insurance policy, you must advise the borrower of this fact.
- the good leasehold title indemnity insurance policy must not contain conditions that you recognise would invalidate or prejudice the interests of the mortgage company
- the level of indemnity must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- your practice must supply a copy of the good leasehold title indemnity insurance to the mortgagor and explain to the borrower 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
- your firm is required to reveal to the insurer all relevant information which you have acquired
- the good leasehold title indemnity insurance policy should be placed on risk without cost to the mortgage company
- you are responsible for approving the terms of the good leasehold title policy on behalf of the lender
| Lender | Requirement |
|---|---|
| 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. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market 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 & Co | The open market value of the property according to the valuation report. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Godiva Mortgages | Minimum of the value of the property. |
| Habito | Higher of purchase price or valuation |
| 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. |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| Metro Bank | The open market value of the property according to the valuation report. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| 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. |
| 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. |
| Progressive BS | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher. |
| Reliance Bank | \xA31,000,000.00 |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| RBS - Direct Line | An amount equal to the value of the property. |
| Ulster Bank | An amount equal to the value of the property. |
| Yorkshire Bank | Open market value of property. |
Non lender-specific considerations
The extent of the terms for good leasehold title indemnity insurance are set out in the policy document. Conveyancing solicitors are obliged to point your non-lender client to the good leasehold title indemnity insurance policy itself. The intention of good leasehold title indemnity insurance is to grant indemnity in respect of the risks specified in the policy schedule - so it is essential check the document 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. Adequacy in this regard should be checked.Good Leasehold Title Contingency insurance: Important 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 Cover normally includes- Money paid with the written consent of the insurance company to free the property from the risks specified in the good leasehold title indemnity insurance.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- The cost of works (including professional fees) for the purpose of the development started, before the commencement of proceedings for the enforcement of the risks specified in the good leasehold title policy, to the extent that such costs are rendered abortive by court order.
- Market value reduction resulting from the successful enforcement of the risks specified in the good leasehold title indemnity insurance.
- The cost 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.
- Liability for damages or compensation incurred in any action concerning the risks specified in the good leasehold title policy, as well as incurred costs and expenses.
Always 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 year prior to the policy being put on risk? Are legal costs covered?
Good Leasehold Title Indemnity Insurance has limitations - Other considerations
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 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 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.