Indemnity Insurance of Lack of Consent Bank conveyancing instructions
Birmingham Midshires and RBS, like most lenders, have their own specific instructions when it comes to lack of consent indemnity insurance. The content herein aims to help conveyancing lawyers on the numerous lender approved list of panel lawyers where the title to be charged includes lack of consent. Solicitors should still check the CML handbook requirements for each mortgage company, whether it be Yorkshire Bank Home Loans, Santander or Coventry BS. The information on this page Is not to be read as lack of consent indemnity insurance advice.
Need help with lack of consent indemnity insurance from your lender?
HSBC and Barnsley BS in common with many banks, instructions are such that where lack of consent indemnity insurance is to be put on risk:
- the lack of consent indemnity insurance policy must be in favor of the mortgage company and, if possible, for the benefit of the borrower and any next owner or lender. If the borrower will not be covered by the lack of consent indemnity insurance policy, you must advise the borrower of this fact.
- your practice must spell out to the borrower that the borrower will need to adhere to any conditions of the lack of consent indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in relation to the policy
- your practice is obliged to reveal to the insurer all relevant information which you have gathered
- the lack of consent indemnity insurance policy should not contain conditions that you are aware would void or compromise the interests of the lender
- your practice must approve the terms of the lack of consent policy on behalf of the bank
- you must send 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 additional insurance may be required if there is further lending against the security of the property
- the limit of indemnity must satisfy the requirements for the bank (See Part II Handbook requirements )
- the lack of consent indemnity insurance policy should be effected without cost to the mortgage company
| 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 Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Barnsley Building Society | 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. |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| Hampden | The open market value of the property according to the valuation report. |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Holmesdale Building Society | 110% |
| 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. |
| Investec | The open market value of the property according to the valuation report. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| RBS (One Account) | An amount equal to the value of the property. |
| RBS - Virgin One | An amount equal to the value of the property. |
Non lender-specific considerations
The extent of the terms for lack of consent indemnity insurance are set out in the policy document. Conveyancing Practitioners are obliged to direct your non-lender client to the lack of consent indemnity insurance policy document. 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 determine that it is as it should be. The lifetime of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.Lack of Consent Contingency insurance: Important aspects and benefits:
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- Reimbursement for compensation incurred in any proceedings regarding the risks specified in the lack of consent indemnity insurance, as well as solicitors charges.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- 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 consent policy, to the extent that such costs are rendered abortive by court decision.
- Money paid with the written consent of the insurance company to free the land from the risks specified in the lack of consent policy.
- Loss in market value resulting from the successful enforcement of the risks specified in the lack of consent insurance.
- 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.
Don't forget to consider what is not included in the lack of consent indemnity insurance e.g. does the policy cover any residence that has been altered within the 12 months prior to the commencement of the policy? Does it cover legal costs?
Lack of Consent Indemnity Insurance has limitations - Additional considerations
Lack of 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 consent indemnity cover will not necessarily be the right solution. Information contained within this webpage is for general information for conveyancers and solicitors in England and Wales on the the lender approved panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the bank 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 above information covers to properties in England and Wales.