Mortgage Company conveyancing panel conditions re Lack of Consent Indemnity Insurance
Barclays and RBS, in common with many lenders, set their own requirements when it comes to lack of consent indemnity insurance. The purpose of this page to assist property law practitioners on the numerous mortgage company conveyancing panel where the title to be charged incorporates lack of consent. It is not a substitute for checking the CML handbook requirements for each bank, be it Santander, Godiva Mortgages or Lloyds TSB. 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?
Barnsley BS and Skipton like most lenders, requirements are that where lack of consent indemnity insurance is to be taken out:
- your practice is duty bound to explain to the mortgagor that the borrower must comply with any conditions of the lack of consent indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in respect of the insurance
- the lack of consent indemnity insurance policy must not contain terms which you are aware would void or prejudice the interests of the bank
- your practice must supply 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 mandatory if there is additional lending against the mortgaged property
- the lack of consent indemnity insurance policy needs to be for the benefit of the bank and, if possible, for the benefit of the borrower and any next owner or bank. If the borrower will not be protected by the lack of consent indemnity insurance policy, you must advise the mortgagor of this fact.
- your practice 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 charge to the mortgage company
- the minimum level of cover for the policy must meet the requirements for the mortgage company (See Part II Handbook requirements )
- your practice is required to disclose to the insurer all relevant information which you have obtained
| Lender | Requirement |
|---|---|
| Accord Buy to Let | 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. |
| 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. |
| Aviva Equity Release | Full value of the property. |
| Clydesdale Bank | Open market value of property. |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| Family Building Society | An amount at least equal to the mortgage advance. |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| Halifax | An amount at least equal to the mortgage advance. |
| JPMorgan | 110% of principal sum. |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| Metro Bank | The open market value of the property according to the valuation report. |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| Paratus | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Secure Trust Bank | An amount at least equal to the market value. 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). |
| St James Place | 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. |
| TSB | The value of the property |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| 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. |
General Lack of Consent indemnity insurance points to consider
The full terms, conditions and exclusions for lack of consent indemnity insurance are shown in the policy paperwork. Conveyancing Practitioners are obliged to direct the borrower 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 set out in the policy schedule - so it is essential check the document to determine that it is as it should be. The continuance 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: Significant characteristics and benefits:
The insurance 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 Policies should be checked for the following- 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.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Money paid with the written consent of the insurance company to free the land from the risks specified in the lack of consent indemnity insurance.
- Expenses for works (including professional 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.
- Cover for compensation incurred in any proceedings concerning the risks specified in the lack of consent insurance, including fees of a legal nature.
- Market value reduction resulting from the successful enforcement of the risks specified in the lack of consent indemnity insurance.
Always check what is not included in the lack of consent insurance e.g. does the policy cover any property that has been altered within the 12 months prior to the commencement of the policy? Are legal costs covered?
Further considerations for lack of consent indemnity insurance
Lack of Consent insurance may satisfy lenders such as Coventry BS or Accord 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. Information provided on this webpage is for general information for Regulated law firms in England and Wales on the the bank 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 is in relation to properties in England and Wales.