Lender conveyancing panel requirements re Good Leasehold Title Indemnity Insurance

Skipton and Chelsea BS, as with the majority of banks, set their own specific instructions when it comes to good leasehold title indemnity insurance. This page sets out to enlighten domestic conveyancing solicitors on the various lender solicitors panel where the title for the the property to be mortgaged contains good leasehold title. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each mortgage company, be it Natwest, Halifax or Yorkshire Bank Home Loans. 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?

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Bank of Scotland and RBS in common with most mortgage companies, obligations require that where good leasehold title indemnity insurance is to be taken out:

• you must approve the terms of the good leasehold title policy on behalf of the mortgage company
• the good leasehold title indemnity insurance policy should not incorporate conditions which you know would invalidate or compromise the interests of the mortgage company
• you is required to reveal to the insurer all relevant information which you have obtained
• your firm must supply a duplicate 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 a further policy could be mandatory if there is additional lending against the security of the property
• the minimum level of cover for the policy must satisfy the requirements for the bank (See Part II Handbook requirements )
• the good leasehold title indemnity insurance policy must be in favor of the bank and, if possible, in favour of the borrower and any next owner or lender. Where the borrower will not be covered by the good leasehold title indemnity insurance policy, the mortgagor should be informed accordingly.
• your practice is duty bound to spell out to the borrower 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 mortgage company of any notice or potential claim in respect of the policy
• the good leasehold title indemnity insurance policy must be placed on risk without charge to the mortgage company

Regarding the extent of cover for the good leasehold title indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Section 9.2 of the Part 2 requirements for lenders:

General Good Leasehold Title indemnity insurance points to consider

The full terms, conditions and exclusions for good leasehold title indemnity insurance are set out in the policy paperwork. Conveyancing solicitors are obliged to direct the borrower to the good leasehold title indemnity insurance policy paperwork. Good Leasehold Title indemnity insurance is designed to provide indemnity in respect of the risks specified in the policy schedule - so it is essential check the schedule to determine that it is in order. The lifetime of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.

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Important aspects and benefits of good leasehold title Contingency insurance :

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 are likely to cover the following

• All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
• Money paid with consent in writing from the insurance company to liberate the property from the risks specified in the good leasehold title policy.
• Loss in market value due to the successful enforcement of the risks specified in the good leasehold title policy.
• The out of pocket expenses of altering or destroying 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.
• Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, prior to 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.
• Reimbursement for compensation incurred in any proceedings in respect of the risks specified in the good leasehold title insurance, including fees of a legal nature.

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Always consider what is excluded from the good leasehold title indemnity insurance e.g. does the policy cover any property that has been altered within the 12 months prior to the policy being put on risk? Are legal costs covered?

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Good Leasehold Title Indemnity Insurance has limitations - Further considerations

Good Leasehold Title insurance may satisfy lenders such as Virgin Money or HSBC 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.

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The content set out above covers to properties in England and Wales.