Lack of Consent Indemnity Insurance Mortgage Company conveyancing requirements
Virgin Money and Natwest, like most banks, dictate their own requirements when it comes to lack of consent indemnity insurance. The purpose of this page to assist domestic conveyancing practitioners on the numerous lender conveyancing panel where the title for the the property to be mortgaged contains lack of consent. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each bank, whether it be HSBC, Barclays or Yorkshire Bank Home Loans. The content 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?
Lloyds TSB and Chelsea BS like most banks, requirements are that where lack of consent indemnity insurance is to be taken out:
- you is required to reveal to the insurer all relevant information which you have gathered
- the level of indemnity must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- your firm are responsible for approving the terms of the lack of consent policy on behalf of the mortgage company
- the lack of consent indemnity insurance policy should be placed on risk without expense to the bank
- the lack of consent indemnity insurance policy should always be in favor of the lender and, wherever possible, in favour of the mortgagor and any future owner or bank. If the mortgagor 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 is obliged to comply with any conditions of the lack of consent indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in respect of the insurance
- the lack of consent indemnity insurance policy should not contain terms that you recognise would void or prejudice the interests of the bank
- your firm 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 could be mandatory if there is supplemental lending against the security of the property
| Lender | Requirement |
|---|---|
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Birmingham Bank | Please contact Head of Operations to discuss (Jackie Burchill) |
| Bradford & Bingley | Amount of loan + 15% |
| Coutts & Co | The open market value of the property according to the valuation report. |
| Cynergy Bank | The market value of the property. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| Godiva Mortgages | Minimum of the value of the property. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Hodge Equity Release | An amount equal to the purchase price or value, whichever is higher. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage, the borrower(s) and any successor in Title. |
| 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. |
| JPMorgan | 110% of principal sum. |
| 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. |
| NRAM Ltd | Preference for full market value of the property, but if this level of cover is not available, will accept a minimum of the actual loan amount. You must approve the policy on our behalf. |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Pepper Money | An amount equal to at least 110% of the purchase price or value, whichever is higher. 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). |
| Principality Building Society | Full market value of the property is preferred but if this is not available we will accept the loan advance amount as minimum. You must approve the policy on our behalf. The estimated property value is stated in the Mortgage Offer in remortgage cases. Otherwise it will be stipulated in the Valuation. |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| Zephyr Mortgages | 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. |
Non lender-specific considerations
The extent of the terms for lack of consent indemnity insurance are shown in the policy paperwork. Property lawyers should direct the borrower to the lack of consent indemnity insurance policy paperwork. Lack of Consent Contingency insurance is devised to grant indemnity in respect of the risks specified in the policy schedule - so it is essential check the schedule to ensure it is correct. The lifetime 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 consent Contingency insurance :
The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the lack of consent indemnity insurance schedule. Lack of Consent indemnity insurance Cover normally includes- The cost of works (including professional fees) for the purpose of the development started, before the commencement of 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 consent in writing from the insurance company to free the land from the risks specified in the lack of consent policy.
- The cost of altering or destroying 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.
- Reimbursement for compensation incurred in any action regarding the risks specified in the lack of consent insurance, including legal and associated costs.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- Market value reduction resulting from the successful enforcement of the risks specified in the lack of consent indemnity insurance.
As with any insurance policy, 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.
Lack of Consent Indemnity Insurance has limitations - Supplemental considerations
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from lack of consent insurance may be adequate for your client. Content on this webpage is for general information for conveyancers and solicitors in England and Wales on the the bank 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.