Indemnity Insurance of Good Leasehold Title Lender conveyancing instructions
Birmingham Midshires and Natwest, as with the majority of lenders, dictate their own specific instructions when it comes to good leasehold title indemnity insurance. The purpose of this page to assist property law firms on the various bank solicitors panel where the title to be charged contains good leasehold title. Solicitors should still check the CML handbook requirements for each lender, be it Nationwide, Santander or Yorkshire Bank Home Loans. 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?
Coventry BS and Accord like many banks, instructions are such that where good leasehold title indemnity insurance is to be put on risk:
- the good leasehold title indemnity insurance policy needs to be in favor of the lender and, wherever possible, for the benefit of the borrower and any future registered proprietor or mortgage company. Where the mortgagor will not be protected by the good leasehold title indemnity insurance policy, you must advise the mortgagor of this fact.
- the minimum level of cover for the policy must satisfy the requirements for the mortgage company (See Part II Handbook requirements )
- the good leasehold title indemnity insurance policy must be placed on risk at no expense to the mortgage company
- your firm is required to reveal to the insurer all relevant information which you have obtained
- you is duty bound to explain to the borrower that the borrower must 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 policy
- the good leasehold title indemnity insurance policy must not incorporate terms which you recognise would invalidate or compromise the interests of the bank
- your firm must approve the terms of the good leasehold title policy on behalf of the lender
- your firm must provide a copy of the good leasehold title indemnity insurance to the borrower and explain to the borrower why the good leasehold title indemnity insurance policy was effected and that a further policy could be required if there is additional borrowing against the security of the property
| 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. |
| 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. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Chelsea 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. |
| Clydesdale Bank | Open market value of property. |
| Cynergy Bank | The market value of the property. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| 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 |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Pepper Money | An amount equal to at least 110% of 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 and also the borrower(s). |
| Secure Trust Bank | An amount at least equal to the market value. 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). |
| St James Place | An amount at least equal to the total of the initial mortgage advance plus any pre-agreed reserve. These amounts will be shown in the mortgage offer. |
| RBS - Direct Line | An amount equal to the value of the property. |
| Ulster Bank | An amount equal to the value of the property. |
| Whistletree | The value of the property |
Non lender-specific considerations
The extent of the terms for good leasehold title indemnity insurance are shown in the policy document. Property lawyers 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 schedule to ensure it is as it should be. The continuance of this non-investment insurance contract is in perpetuity unless otherwise stated in the good leasehold title indemnity insurance policy. Again, please check that this is as you expected.Important characteristics and benefits of good leasehold title indemnity 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- 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 indemnity insurance, to the extent that such costs are rendered abortive by court order.
- Cover for compensation incurred in any proceedings concerning the risks specified in the good leasehold title indemnity insurance, as well as solicitors charges.
- 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.
- Loss in market value 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 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 insurer
Don't forget to consider what is excluded from 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? Are legal costs covered?
Good Leasehold Title Indemnity Insurance has limitations - Additional considerations
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 answer. Information contained within this webpage is for general information for conveyancers and solicitors in England and Wales on the the bank approved 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 above information covers to properties in England and Wales.