Mortgage Company conveyancing panel requirements re Lack of Consent Indemnity Insurance
Yorkshire Building Society and Virgin Money, as with many banks, set their own requirements when it comes to lack of consent indemnity insurance. This page sets out to enlighten property law firms on the numerous mortgage company conveyancing panel where the title for the the property to be mortgaged includes lack of consent. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each bank, for example Lloyds TSB, Nationwide or Leeds Building Society. The information on this page is not focused on lack of consent indemnity insurance requirements.
Need help with lack of consent indemnity insurance from your lender?
Accord and Skipton as with the majority of banks, instructions are such that where lack of consent indemnity insurance is effected:
- your practice must approve the terms of the lack of consent policy on behalf of the mortgage company
- the lack of consent indemnity insurance policy must not incorporate conditions that you are aware would void or compromise the interests of the bank
- your practice must provide a copy of the lack of consent indemnity insurance to the borrower and explain to the borrower why the lack of consent indemnity insurance policy was effected and that a further policy may be mandatory if there is further lending against the security of the property
- the level of indemnity must meet the requirements for the lender (See Part II Handbook requirements )
- you must reveal to the insurer all relevant information which you have obtained
- your practice is duty bound to spell out to the mortgagor that the borrower will need to comply with any conditions of the lack of consent indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in relation to the policy
- the lack of consent indemnity insurance policy should always be in favor of the bank and, if possible, for the benefit of the mortgagor and any future registered proprietor or lender. Where the mortgagor will not be covered by the lack of consent indemnity insurance policy, the borrower should be advised accordingly.
- the lack of consent indemnity insurance policy should be effected at no expense to the bank
| Lender | Requirement |
|---|---|
| Accord Mortgages | An amount at least equal to the amount of the mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| Aldermore Bank | 110% of the purchase price or valuation, whichever is greater. 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). Where a property is being sold at undervalue and an equity gift is being provided, the conveyancer must ensure the seller obtains an Insolvency Act Indemnity Insurance Policy and provides evidence to you, so that you are comfortable an appropriate policy is in place to Aldermore’s satisfaction. This indemnity insurance aims to cover Aldermore against any future claims by creditors of the seller that may challenge the sale. |
| April Mortgages | An amount at least equal to the mortgage advance. |
| Godiva Mortgages | Minimum of the value of the property. |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| 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. |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| Nedbank | You are to refer to us for specific instructions on any matter involving indemnity insurance. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Reliance Bank | \xA31,000,000.00 |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| The Mortgage Works | The full purchase price/value of the property whichever is higher |
| RBS - Direct Line | An amount equal to the value of the property. |
| 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. |
| Ulster Bank | An amount equal to the value of the property. |
Lack of Consent Contingency Insurance : Reflections
The full terms, conditions and exclusions for lack of consent indemnity insurance are identified in the policy document. Conveyancing Practitioners should direct your non-lender client to the lack of consent indemnity insurance policy itself. The intention of lack of consent indemnity insurance is to grant indemnity in respect of the risks specified in the policy schedule - so you should check the document to ensure it is correct. The duration of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.Important characteristics and benefits of lack of consent Contingency 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 Consent indemnity insurance Policies should be checked for the following- Cover for compensation incurred in any action regarding the risks specified in the lack of consent policy, including fees of a legal nature.
- All sums paid with consent in writing from the insurance company to free the land from the risks specified in the lack of consent indemnity 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 consent policy, to the extent that such costs are rendered abortive by court order.
- Diminution in value due to the successful enforcement of the risks specified in the lack of consent policy.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- 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.
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 consent policy will be invalidated.
Other considerations for lack of consent indemnity insurance
Lack of Consent insurance may satisfy lenders such as Coventry BS or Godiva Mortgages 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. Content on this webpage is for general information for Regulated law firms in England and Wales on the the lender conveyancing 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 lack of 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 content set out above is in relation to properties in England and Wales.