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

Coventry BS and Bank of Scotland, as with many lenders, dictate their own requirements when it comes to lack of building regulation consent indemnity insurance. The purpose of this page to assist property law firms on the numerous bank approved list of panel lawyers where the title to be charged includes lack of building regulation consent. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each lender, be it Halifax, RBS or Barclays. The information 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?

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Virgin Money and Lloyds TSB like many lenders, requirements are that where lack of building regulation consent indemnity insurance is to be taken out:

• your practice must approve the terms of the lack of building regulation consent policy on behalf of the mortgage company
• the lack of building regulation consent indemnity insurance policy must not contain conditions that you know would invalidate or prejudice the interests of the lender
• your practice is duty bound to explain to the mortgagor that the borrower will need 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 insurance
• your practice must provide a copy of the lack of building regulation consent indemnity insurance to the mortgagor and explain to the mortgagor why the lack of building regulation consent indemnity insurance policy was effected and that a further policy may be required if there is additional borrowing against the mortgaged property
• the lack of building regulation consent indemnity insurance policy should always be for the benefit of the lender and, wherever possible, for the benefit of the mortgagor and any subsequent owner or lender. Where the borrower will not be covered by the lack of building regulation consent indemnity insurance policy, you must advise the borrower of this fact.
• the limit of indemnity must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
• the lack of building regulation consent indemnity insurance policy must be placed on risk at no cost to the mortgage company
• your firm is required to disclose to the insurer all relevant information which you have gathered

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 Paragraph 9.2 of the Part 2 requirements for banks:

General Lack of Building Regulation Consent indemnity insurance points to consider

The full terms, conditions and exclusions for lack of building regulation consent indemnity insurance are shown in the policy document. Conveyancing solicitors are obliged to point your non-lender client 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 set out in the policy schedule - so it is essential check any draft to ensure it is correct. The continuance of this non-investment insurance contract is in perpetuity unless otherwise stated in the lack of building regulation consent indemnity insurance policy. It is well worth checking that the time frame is correct.

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Lack of Building Regulation Consent Contingency insurance: Important characteristics and benefits:

The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the lack of building regulation consent indemnity insurance schedule. Lack of Building Regulation Consent indemnity insurance Policies should be checked for the following

• 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.
• 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.
• The cost of works (including professional 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.
• Diminution in value resulting from the successful enforcement of the risks specified in the lack of building regulation consent indemnity insurance.
• 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 policy.
• All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer

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Don't forget to check what is excluded from the lack of building regulation consent insurance e.g. does the policy cover any residence that has been altered within the year prior to the policy being put on risk? Are legal costs covered?

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Lack of Building Regulation Consent Indemnity Insurance has limitations - Further 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.

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The above information is in relation to properties in England and Wales.