Indemnity Insurance of Local Search Bank conveyancing instructions
Bank of Scotland and Nationwide, in common with the majority of mortgage companies, set their own requirements when it comes to local search indemnity insurance. The purpose of this page to assist property law lawyers on the various bank solicitors panel where the title to be charged incorporates local search. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each mortgage company, for example Lloyds TSB, Virgin Money or Yorkshire Building Society. The content on this page is not focused on local search indemnity insurance requirements.
Need help with local search indemnity insurance from your lender?
Leeds Building Society and Chelsea BS in common with many lenders, requirements are that where local search indemnity insurance is to be taken out:
- the local search indemnity insurance policy must be placed on risk without charge to the bank
- the local search indemnity insurance policy must not contain terms which you know would void or prejudice the interests of the bank
- the minimum level of cover for the policy must meet the requirements for the lender (See Part II Handbook requirements )
- your firm must spell out to the mortgagor that the borrower must comply with any conditions of the local search indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in respect of the policy
- your firm are responsible for approving the terms of the local search policy on behalf of the mortgage company
- your firm must send a duplicate of the local search indemnity insurance to the borrower and explain to the borrower why the local search indemnity insurance policy was effected and that a further policy might be necessary if there is supplemental borrowing against the security of the property
- your firm is obliged to disclose to the insurer all relevant information which you have gathered
- the local search indemnity insurance policy must be for the benefit of the mortgage company and, wherever possible, for the benefit of the mortgagor and any future owner or mortgagee. If the mortgagor will not be covered by the local search indemnity insurance policy, you must advise the borrower of this fact.
| Lender | Requirement |
|---|---|
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| 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. |
| Britannia | Cover to the full value of the property. |
| Coventry Building Society | Minimum of the value of the property. |
| Cynergy Bank | The market value of the property. |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Habito | Higher of purchase price or valuation |
| ITL Mortgages | Minimum of the value of the property. |
| 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. |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| New Street Mortgages | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Perenna | The higher of the purchase price or valuation. |
| Platform | 110% of principal sum. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
| Whistletree | The value of the property |
General Local Search indemnity insurance points to consider
The extent of the terms for local search indemnity insurance are explained in the policy document. Property lawyers should point the borrower to the local search indemnity insurance policy itself. Local Search indemnity insurance is devised to afford indemnity in respect of the risks specified in the policy schedule - so it’s important to check the schedule to determine that it is correct. 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.Local Search indemnity insurance: Significant aspects and benefits:
The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the local search indemnity insurance schedule. Local Search indemnity insurance Cover normally includes- The cost of works (including professional fees) for the purpose of the development begun, or contracted for, before the commencement of proceedings for the enforcement of the risks specified in the local search insurance, to the extent that such costs are rendered abortive by court order.
- 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.
- Reimbursement for compensation incurred in any action regarding the risks specified in the local search policy, including fees of a legal nature.
- Money paid with the written consent of the insurance company to free the property from the risks specified in the local search policy.
- Loss in market value due to the successful enforcement of the risks specified in the local search indemnity insurance.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
You also need to be sure that the answers on the application form are correct. Regardless of how remote a claim on the lender insurance policy might be you can be sure that the insurer will check the details on any proposal form very carefully before any claim is met.
Local Search 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 local search 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 mortgage company approved panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the mortgage company 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 local search 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.