Mortgage Company conveyancing panel requirements re Lack of Building Regulation Consent Indemnity Insurance

Leeds Building Society and Birmingham Midshires, as with the majority of mortgage companies, have their own specific instructions when it comes to lack of building regulation consent indemnity insurance. The purpose of this page to assist property law practitioners on the numerous mortgage company approved list of panel lawyers where the title for the the property to be mortgaged contains lack of building regulation consent. Solicitors should still check the CML handbook requirements for each mortgage company, whether it be Virgin Money, Yorkshire Bank Home Loans or Lloyds TSB. The content on this page is not focused on lack of building regulation consent indemnity insurance requirements.

Need help with lack of building regulation consent indemnity insurance from your lender?

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Coventry BS and Barclays as with the majority of lenders, instructions are such that where lack of building regulation consent indemnity insurance is to be taken out:

• the lack of building regulation consent indemnity insurance policy should not contain terms that you recognise would invalidate or compromise the interests of the mortgage company
• the lack of building regulation consent indemnity insurance policy needs to be in favor of the bank and, wherever possible, for the benefit of the mortgagor and any future owner or mortgage company. If the borrower will not be covered by the lack of building regulation consent indemnity insurance policy, the mortgagor must be advised accordingly.
• the lack of building regulation consent indemnity insurance policy must be effected at no expense to the mortgage company
• you must provide a copy of the lack of building regulation consent indemnity insurance to the borrower and explain to the mortgagor why the lack of building regulation consent indemnity insurance policy was effected and that additional insurance could be required if there is supplemental lending against the security of the property
• you must approve the terms of the lack of building regulation consent policy on behalf of the mortgage company
• you must reveal to the insurer all relevant information which you have gathered
• you is duty bound to explain to the borrower that the borrower will need to adhere to any conditions of the lack of building regulation consent indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in relation to the policy
• the minimum level of cover for the policy must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )

Regarding the extent of cover for the lack of building regulation consent indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Section 9.2 of the CML handbook PII requirements for banks:

Non lender-specific considerations

The extent of the terms for lack of building regulation consent indemnity insurance are identified in the policy paperwork. Conveyancing solicitors are obliged to direct the borrower to the lack of building regulation consent indemnity insurance policy document. The intention of lack of building regulation consent indemnity insurance is to grant indemnity in respect of the risks specified in the policy schedule - so it’s important to check the document to ensure it is correct. The continuance of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.

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Significant characteristics and benefits of lack of building regulation consent Contingency insurance :

Protection via such a policy is to cover the risk of third parties looking to enforce rights that can affect the use of a property. Lack of Building Regulation Consent indemnity insurance Policies are likely to cover the following

• Expenses for works (including professional fees) for the purpose of the development commenced, before the commencement of proceedings for the enforcement of the risks specified in the lack of building regulation consent policy, to the extent that such costs are rendered abortive by court decision.
• Liability for damages or compensation incurred in any proceedings regarding the risks specified in the lack of building regulation consent insurance, as well as legal and associated costs.
• All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
• Loss in market value due to the successful enforcement of the risks specified in the lack of building regulation consent insurance.
• All sums paid with consent in writing from the insurance company to free the land from the risks specified in the lack of building regulation consent policy.
• The out of pocket expenses of altering or taking down 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.

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As is the case with all conventional insurance, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the lack of building regulation consent policy will be invalidated.

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Other considerations for lack of building regulation consent indemnity insurance

Lack of Building Regulation Consent insurance may satisfy lenders such as Santander 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 is in relation to properties in England and Wales.