Indemnity Insurance of Lack of Building Regulation Consent Lender conveyancing requirements
Skipton and HSBC, like most lenders, set their own specific instructions when it comes to lack of building regulation consent indemnity insurance. The content herein aims to help residential conveyancing practitioners on the numerous mortgage company conveyancing panel where the title for the the property to be mortgaged incorporates lack of building regulation consent. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each mortgage company, be it Santander, Halifax or Virgin Money. The content on this page Is not to be read as lack of building regulation consent indemnity insurance advice.
Need help with lack of building regulation consent indemnity insurance from your lender?
Leeds Building Society and Nationwide in common with most mortgage companies, instructions are such that where lack of building regulation consent indemnity insurance is to be taken out:
- the level of indemnity must meet the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
- you must supply a duplicate of the lack of building regulation consent indemnity insurance to the borrower and explain to the borrower why the lack of building regulation consent indemnity insurance policy was effected and that a further policy could be required if there is supplemental lending against the mortgaged property
- you is duty bound to explain to the mortgagor that the borrower must comply with any conditions of the lack of building regulation consent indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the insurance
- your practice are responsible for approving the terms of the lack of building regulation consent policy on behalf of the bank
- the lack of building regulation consent indemnity insurance policy should be placed on risk without charge to the mortgage company
- the lack of building regulation consent indemnity insurance policy must be for the benefit of the bank and, if possible, for the benefit of the borrower and any subsequent registered proprietor or mortgage company. Where the mortgagor will not be covered by the lack of building regulation consent indemnity insurance policy, the borrower must be informed accordingly.
- the lack of building regulation consent indemnity insurance policy should not incorporate terms which you recognise would invalidate or prejudice the interests of the lender
- you must disclose to the insurer all relevant information which you have gathered
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Adam & Company International | The open market value of the property according to the valuation report. |
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Bank of Scotland Private | [This lender has not published an answer to this question. Please contact the lender.]
|
| Barclays plc | Higher of purchase price or valuation |
| Birmingham Bank | Please contact Head of Operations to discuss (Gareth Allen) |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| 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. |
| 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. |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| Masthaven Bank | An amount at least equal to the total mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| Platform | 110% of principal sum. |
| Scottish Building Society | Amount of mortgage plus 25%. |
| 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). |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| The Mortgage Works | The full purchase price/value of the property whichever is 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. |
Lack of Building Regulation Consent Contingency Insurance : Reflections
The full terms, conditions and exclusions for lack of building regulation consent indemnity insurance are set out in the policy document. Conveyancing solicitors are obliged to point 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 afford indemnity in respect of the risks set out in the policy schedule - so it’s important to check the schedule to ensure it is in order. 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.Significant aspects and benefits of lack of building regulation consent 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. Lack of Building Regulation Consent indemnity insurance Cover normally includes- Money paid with the written consent of the insurance company to liberate the land from the risks specified in the lack of building regulation consent insurance.
- 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
- Market value reduction due to the successful enforcement of the risks specified in the lack of building regulation consent insurance.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development started, prior to proceedings for the enforcement of the risks specified in the lack of building regulation consent indemnity insurance, to the extent that such costs are rendered abortive by court order.
- Liability for damages or compensation incurred in any proceedings regarding the risks specified in the lack of building regulation consent policy, including incurred costs and expenses.
You also need to be sure that the answers on the application form are accurate. However remote the likelihood of a claim on the mortgage company insurance policy might be you can be sure that the insurer will check the details on any proposal form very carefully before any claim is met.
Lack of Building Regulation Consent Indemnity Insurance has limitations - Additional considerations
Lack of Building Regulation Consent 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 lack of building regulation consent indemnity cover will not necessarily be the right solution. Information provided on this webpage is for general information for conveyancers and solicitors in England and Wales on the the mortgage company conveyancing panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the mortgage company 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 lack of building regulation consent 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.