Indemnity Insurance of Improvement Grant Liability Lender conveyancing instructions
Yorkshire Building Society and Santander, in common with many banks, set their own specific instructions when it comes to improvement grant liability indemnity insurance. The purpose of this page to assist property law practitioners on the various mortgage company solicitors panel where the title for the the property to be mortgaged contains improvement grant liability. Solicitors should still check the CML handbook requirements for each lender, be it Accord, Coventry BS or Yorkshire Bank Home Loans. The information on this page Is not to be read as improvement grant liability indemnity insurance advice.
Need help with improvement grant liability indemnity insurance from your lender?
Bank of Scotland and Chelsea BS like many lenders, obligations require that where improvement grant liability indemnity insurance is effected:
- the improvement grant liability indemnity insurance policy should not incorporate conditions that you are aware would invalidate or prejudice the interests of the bank
- you must explain to the mortgagor that the borrower must comply with 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
- you is required to disclose to the insurer all relevant information which you have gathered
- the improvement grant liability indemnity insurance policy must be in favor of the lender and, if possible, in favour of the mortgagor and any subsequent registered proprietor or lender. Where the mortgagor will not be covered by the improvement grant liability 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 bank (see UK Finance Lenders’ Handbook Part 2 )
- your practice must send a copy of the improvement grant liability indemnity insurance to the borrower and explain to the borrower why the improvement grant liability indemnity insurance policy was effected and that additional insurance could be necessary if there is further lending against the mortgaged property
- your firm are responsible for approving the terms of the improvement grant liability policy on behalf of the lender
- the improvement grant liability indemnity insurance policy must be effected without charge to the bank
| Lender | Requirement |
|---|---|
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| April Mortgages | An amount at least equal to the mortgage advance. |
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Coutts Finance | The open market value of the property according to the valuation report. |
| Halifax | An amount at least equal to the mortgage advance. |
| Hinckley and Rugby | The policy must be for our benefit and for no less than the amount lent to the borrower, including retentions, stage payments and interest. |
| 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. |
| Legal & General Home Finance | The policy should be for the full market value of the property and indexed linked. The policy must be for our benefit, and for the benefit of the borrower where available. The policy must benefit all successors and assigns. |
| Lloyds | The value of the property. |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| 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). |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| RBS - Direct Line One | An amount equal to the value of the property. |
| RBS- First Active | An amount equal to the value of the property. |
| RBS - Virgin One | An amount equal to the value of the property. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
| 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. |
Non lender-specific considerations
The full terms, conditions and exclusions for improvement grant liability indemnity insurance are shown in the policy document. Property lawyers are obliged to direct the borrower to the improvement grant liability indemnity insurance policy document. Improvement Grant Liability Contingency insurance is designed to afford indemnity in respect of the risks set out in the policy schedule - so you should check the schedule to determine that it is in order. The continuance of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.Improvement Grant Liability indemnity insurance: Important features and benefits:
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the improvement grant liability indemnity insurance schedule. Improvement Grant Liability indemnity insurance Policies are likely to cover the following- Liability for damages or compensation incurred in any proceedings regarding the risks specified in the improvement grant liability insurance, including incurred costs and expenses.
- 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 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.
- Loss in market value due to the successful enforcement of the risks specified in the improvement grant liability insurance.
- All sums paid with the written consent of the insurance company to liberate the property from the risks specified in the improvement grant liability policy.
Don't forget to check what is excluded from the improvement grant liability indemnity insurance e.g. does the policy cover any property that has been altered within the year prior to the commencement of the policy? Are legal costs covered?
Improvement Grant Liability Indemnity Insurance has limitations - Other considerations
There may be consequences arising from the enforcement of the risks identified in the improvement grant liability indemnity insurance which are not adequately covered by financial compensation. 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 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 covers to properties in England and Wales.