Indemnity Insurance of Lack of Building Regulation Consent Mortgage Company conveyancing obligations

Bank of Scotland and Natwest, like many banks, 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 solicitors on the various bank approved list of panel lawyers where the title for the the property to be mortgaged incorporates lack of building regulation consent. Lawyers are advised to familiarise themselves with the CML handbook requirements for each lender, whether it be Barclays, Santander or RBS. 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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Lloyds TSB and Barnsley BS in common with most mortgage companies, obligations require that where lack of building regulation consent indemnity insurance is to be taken out:

• the lack of building regulation consent indemnity insurance policy should be effected at no cost to the lender
• the limit of indemnity must meet the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
• your firm must reveal to the insurer all relevant information which you have obtained
• the lack of building regulation consent indemnity insurance policy needs to be in favor of the lender and, if possible, in favour of the borrower and any next owner or mortgage company. Where the borrower will not be protected by the lack of building regulation consent indemnity insurance policy, you must advise the borrower of this fact.
• the lack of building regulation consent indemnity insurance policy must not incorporate terms which you are aware would void or compromise the interests of the lender
• you must provide a copy 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 further borrowing against the mortgaged property
• your firm is duty bound to spell out to the mortgagor that the borrower is obliged to comply with 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
• you are responsible for approving the terms of the lack of building regulation consent policy on behalf of the bank

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 Part 2 requirements for banks:

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 paperwork. Conveyancing Practitioners should point your non-lender client to the lack of building regulation consent indemnity insurance policy itself. 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 document to ensure it is in order. The lifetime of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.

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Lack of Building Regulation Consent Contingency insurance: Significant features and benefits:

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 should be checked for the following

• Cover for compensation incurred in any proceedings in respect of the risks specified in the lack of building regulation consent policy, as well as fees of a legal nature.
• 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.
• Money paid with the written consent of the insurance company to free the property from the risks specified in the lack of building regulation consent policy.
• All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
• Market value reduction resulting from the successful enforcement of the risks specified in the lack of building regulation consent insurance.
• Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development commenced, prior to 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.

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Always consider what is not included in the lack of building regulation consent 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?

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Lack of Building Regulation Consent Indemnity Insurance has limitations - Additional considerations

Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from lack of building regulation consent insurance may be adequate for your client.

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The above information covers to properties in England and Wales.