Bank conveyancing panel conditions re Improvement Grant Liability Indemnity Insurance
Leeds Building Society and Barclays, in common with many lenders, have their own specific instructions when it comes to improvement grant liability indemnity insurance. The purpose of this page to assist residential conveyancing lawyers on the numerous bank approved list of panel lawyers where the title for the the property to be mortgaged incorporates improvement grant liability. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each mortgage company, for example Skipton, Chelsea BS or HSBC. The information on this page is not focused on improvement grant liability indemnity insurance requirements.
Need help with improvement grant liability indemnity insurance from your lender?
Accord and Virgin Money in common with the majority of banks, instructions are such that where improvement grant liability indemnity insurance is to be put on risk:
- the improvement grant liability indemnity insurance policy must be for the benefit of the mortgage company and, wherever possible, for the benefit of the borrower and any subsequent registered proprietor or mortgagee. Where the borrower will not be protected by the improvement grant liability indemnity insurance policy, the borrower must be advised accordingly.
- your firm must disclose to the insurer all relevant information which you have gathered
- the minimum level of cover for the policy must meet the requirements for the mortgage company (See Part II Handbook requirements )
- the improvement grant liability indemnity insurance policy should be placed on risk without expense to the lender
- the improvement grant liability indemnity insurance policy must not incorporate terms that you are aware would void or prejudice the interests of the bank
- your firm must approve the terms of the improvement grant liability policy on behalf of the bank
- your firm is duty bound to explain to the mortgagor that the borrower will need to adhere to any conditions of the improvement grant liability indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in respect of the policy
- your practice must send a duplicate of the improvement grant liability indemnity insurance to the borrower and explain to the mortgagor why the improvement grant liability indemnity insurance policy was effected and that additional insurance may be necessary if there is supplemental lending against the security of the property
| Lender | Requirement |
|---|---|
| Allied Irish Bank | At least the amount of the mortgage advance. |
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Bank of Scotland Private | [This lender has not published an answer to this question. Please contact the lender.]
|
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Bradford & Bingley | Amount of loan + 15% |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Coutts & Co | The open market value of the property according to the valuation report. |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Godiva Mortgages | Minimum of the value of the property. |
| 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. |
| Intelligent Finance | 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. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| Landmark | 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. |
| Paratus | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Reliance Bank | \xA31,000,000.00 |
| Scottish Widows | The value of the property. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| RBS - Virgin One | An amount equal to the value of the property. |
| Topaz Finance | Valuation or purchase price, whichever is higher. The policy must always benefit the borrower and any subsequent owner or mortgagee - the policy must be index linked. |
General Improvement Grant Liability indemnity insurance points to consider
The extent of the terms for improvement grant liability indemnity insurance are set out in the policy document. Property lawyers should point your non-lender client to the improvement grant liability indemnity insurance policy paperwork. Improvement Grant Liability indemnity insurance is devised to afford indemnity in respect of the risks specified in the policy schedule - so it is essential check any draft to determine that it is correct. The lifetime of this non-investment insurance contract is in perpetuity unless otherwise stated in the improvement grant liability indemnity insurance policy. Again, please check that this is as you expected.Important aspects and benefits of improvement grant liability 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. Improvement Grant Liability indemnity insurance Policies are likely to cover the following- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- Expenses for works (including professional fees) for the purpose of the development begun, or contracted for, prior to proceedings for the enforcement of the risks specified in the improvement grant liability insurance, to the extent that such costs are rendered abortive by court order.
- All sums paid with consent in writing from the insurance company to free the property from the risks specified in the improvement grant liability indemnity insurance.
- The cost 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.
- Liability for damages or compensation incurred in any action concerning the risks specified in the improvement grant liability indemnity insurance, including incurred costs and expenses.
- Loss in market value due to the successful enforcement of the risks specified in the improvement grant liability policy.
Always check what is not included in the improvement grant liability indemnity insurance e.g. does the policy cover any residence that has been altered within the 12 months prior to the commencement of the policy? Are legal costs covered?
Improvement Grant Liability 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 improvement grant liability insurance may be adequate for your client. Information provided on 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 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 improvement grant liability 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.