Lack of Planning Permission Indemnity Insurance Mortgage Company conveyancing requirements
Bank of Scotland and Birmingham Midshires, as with many banks, have their own requirements when it comes to lack of planning permission indemnity insurance. This page sets out to enlighten residential conveyancing lawyers on the different lender approved list of panel lawyers where the title to be charged includes lack of planning permission. Solicitors should still check the CML handbook requirements for each bank, be it Accord, Nationwide or RBS. The information on this page Is not to be read as lack of planning permission indemnity insurance advice.
Need help with lack of planning permission indemnity insurance from your lender?
In your capacity as a solicitor on a lender panel you must enquire (including any supplemental enquiries to clarify any issues which may arise) to ensure the premises has the correct planning consents (including listed building consent) for its construction and any subsequent change to the property and its current use; and there is no apparent breach of the conditions of that or any other consent or certificate affecting the property; and that no matter is revealed which would preclude the residence from being utilised as residential property or that the property may be the subject of enforcement proceedings.
Where there is evidence of a breach of planning permission but in your professional judgment there is no reasonable chance of enforcement action and, following appropriate enquiries, and you are satisfied that the title is good and marketable and can provide an unqualified COT, the mortgage company will not insist on Lack of Planning Permission indemnity insurance and you may proceed.
Where there is such evidence and all outstanding conditions will not be satisfied by completion, where you are not able to provide an unconditional certificate of title, you should reveal this to the mortgage company in accordance with 2.3. of the UK Finance Lenders’ Handbook P2. Each bank such as Bank of Scotland or Birmingham Midshires may adopt a different approach.
About Lack of Planning Permission Indemnity Insurance
Lack of Planning Permission Indemnity Insurance is typically required where there is no documentary evidence of compliance with conditions can be provided for works that have been in existence for for over a year, whether a domestic property or large commercial project. The loss arises following successful enforcement action by the local authority. In a typical conveyancing scenario the vendor would be expected to cover the costs of the Lack of Planning Permission Indemnity Insurance, which would be taken out in the buyer’s name as well as the lender.
A lack of planning permission indemnity insurance policy is usually less expensive than seeking retrospective permission and is undoubtedly much quicker. The flipside is that the risk of enforcement action still remains.
Natwest and Halifax in common with many mortgage companies, obligations require that where lack of planning permission indemnity insurance is to be taken out:
- the lack of planning permission indemnity insurance policy needs to be in favor of the bank and, wherever possible, for the benefit of the mortgagor and any subsequent registered proprietor or lender. If the borrower will not be covered by the lack of planning permission indemnity insurance policy, you must advise the mortgagor of this fact.
- the minimum level of cover for the policy must meet the requirements for the mortgage company (See Part II Handbook requirements )
- you must spell out to the borrower that the borrower is obliged to comply with any conditions of the lack of planning permission indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in relation to the insurance
- the lack of planning permission indemnity insurance policy must not incorporate terms that you know would void or compromise the interests of the mortgage company
- your firm must supply a duplicate of the lack of planning permission indemnity insurance to the borrower and explain to the borrower why the lack of planning permission indemnity insurance policy was effected and that a further policy might be required if there is further lending against the security of the property
- the lack of planning permission indemnity insurance policy must be placed on risk without cost to the bank
- your firm is required to reveal to the insurer all relevant information which you have acquired
- you are responsible for approving the terms of the lack of planning permission policy on behalf of the lender
| Lender | Requirement |
|---|---|
| Accord Mortgages | |
| Birmingham Bank | |
| Coutts Finance | |
| DB UK Bank | |
| Ecology Building Society | |
| Foundation Home loans | |
| Furness Building Society | |
| Gen H | |
| HSBC UK Bank | |
| Harpenden Building Society | |
| ITL Mortgages | |
| Lloyds Bank Private Banking | |
| ModaMortgages | |
| Paragon Residential | |
| Progressive BS | |
| Saffron Building Society | |
| The Mortgage Lender | |
| The Mortgage Works | |
| Royal Bank of Scotland | |
| Virgin |
General Lack of Planning Permission indemnity insurance points to consider
The full terms, conditions and exclusions for lack of planning permission indemnity insurance are explained in the policy document. Conveyancing solicitors should point your non-lender client to the lack of planning permission indemnity insurance policy paperwork. The intention of lack of planning permission indemnity insurance is to afford indemnity in respect of the risks set out in the policy schedule - so you should check the document to determine that it is as it should be. The duration of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.Lack of Planning Permission indemnity insurance: Significant features and benefits:
The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the lack of planning permission indemnity insurance schedule. Lack of Planning Permission indemnity insurance Policies are likely to cover the following- Loss in market value resulting from the successful enforcement of the risks specified in the lack of planning permission 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 planning permission indemnity insurance, to the extent that such costs are rendered abortive by court order.
- Cover for compensation incurred in any action regarding the risks specified in the lack of planning permission indemnity insurance, as well as incurred costs and expenses.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- All sums paid with the written consent of the insurance company to free the property from the risks specified in the lack of planning permission indemnity insurance.
- 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.
You also need to be sure that the answers on the application form are correct. However remote the likelihood of a claim on the lender insurance policy might be you can rest assured that the insurer will check the details on any proposal form thoroughly before any claim is admitted.
Additional considerations for lack of planning permission indemnity insurance
Lack of Planning Permission insurance may satisfy lenders such as Godiva Mortgages or Lloyds TSB 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.The above information covers to properties in England and Wales.