Indemnity Insurance of Lack of Consent Lender conveyancing requirements
RBS and Godiva Mortgages, like many banks, set their own requirements when it comes to lack of consent indemnity insurance. This page is designed to help property law firms on the various bank conveyancing panel where the title to be charged contains lack of consent. Solicitors should still check the CML handbook requirements for each mortgage company, be it Bank of Scotland, Natwest 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?
Barnsley BS and Nationwide as with the majority of 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 effected at no cost to the lender
- your practice must point out to the mortgagor that the borrower must 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
- the lack of consent indemnity insurance policy should always be in favor of the bank and, if possible, in favour of the mortgagor and any next owner or mortgagee. Where the mortgagor will not be protected by the lack of consent indemnity insurance policy, you must advise the borrower of this fact.
- the lack of consent indemnity insurance policy must not contain conditions which you know would void or compromise the interests of the mortgage company
- your firm is required to reveal to the insurer all relevant information which you have acquired
- your firm are responsible for approving the terms of the lack of consent policy on behalf of the lender
- the minimum level of cover for the policy must satisfy the requirements for the mortgage company (See Part II Handbook requirements )
- your practice must send a duplicate of the lack of consent indemnity insurance to the mortgagor and explain to the mortgagor why the lack of consent indemnity insurance policy was effected and that additional insurance could be necessary if there is further lending against the mortgaged property
| 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. |
| Adam & Company International | The open market value of the property according to the valuation report. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Britannia | Cover to the full value of the property. |
| Chelsea 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. |
| Clydesdale Bank | Open market value of property. |
| Coventry Building Society | Minimum of the value of the property. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| Hodge | 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. |
| 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. |
| JPMorgan | 110% of principal sum. |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| Lloyds | The value of the property. |
| Metro Bank | The open market value of the property according to the valuation report. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Mortgage Express (No 2) | [This lender has not published an answer to this question. Please contact the lender.]
|
| National Westminster Bank | An amount equal to the value of the property. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
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. Property lawyers should point your non-lender client to the lack of consent indemnity insurance policy paperwork. Lack of Consent Contingency insurance is designed to provide 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 lifetime 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.Lack of Consent indemnity insurance: Significant features 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 are likely to cover the following- 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.
- Money paid with the written consent of the insurance company to liberate the land from the risks specified in the lack of consent policy.
- Reimbursement for compensation incurred in any action concerning the risks specified in the lack of consent policy, as well as fees of a legal nature.
- All other costs and expenses incurred by the Insured with consent in writing from 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 insurance, to the extent that such costs are rendered abortive by court decision.
- Market value reduction due to the successful enforcement of the risks specified in the lack of consent insurance.
Due diligence should extend to checking that the answers on the application form are correct. However remote the likelihood of a claim on the mortgage company insurance policy might be you can certain that the insurer will check the details on any proposal form very carefully prior to any claim being met.
Lack of Consent Indemnity Insurance has limitations - Additional considerations
Lack of Consent Indemnity insurance isn’t a solution to all of the relevant problems. Content on this webpage is for general information for conveyancers and solicitors in England and Wales on the the mortgage company 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 content set out above covers to properties in England and Wales.