Indemnity Insurance of Local Search Lender conveyancing instructions
Leeds Building Society and Bank of Scotland, like the majority of banks, set their own requirements when it comes to local search indemnity insurance. The content herein aims to help property law solicitors on the various bank solicitors panel where the title to be charged contains local search. Solicitors should still check the CML handbook requirements for each mortgage company, be it Accord, Chelsea BS or Birmingham Midshires. The information on this page is not focused on local search indemnity insurance requirements.
Need help with local search indemnity insurance from your lender?
Halifax and Yorkshire Bank Home Loans as with the majority of mortgage companies, obligations require that where local search indemnity insurance is effected:
- the local search indemnity insurance policy should be placed on risk at no expense to the lender
- the local search indemnity insurance policy should always be for the benefit of the lender and, if possible, in favour of the borrower and any future registered proprietor or lender. If the mortgagor will not be covered by the local search indemnity insurance policy, you must advise the mortgagor of this fact.
- you is obliged to disclose to the insurer all relevant information which you have obtained
- the level of indemnity must meet the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- your practice must send a copy of the local search indemnity insurance to the mortgagor and explain to the mortgagor why the local search indemnity insurance policy was effected and that additional insurance could be mandatory if there is supplemental lending against the security of the property
- your practice must explain to the borrower that the borrower is obliged to comply with any conditions of the local search indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the insurance
- the local search indemnity insurance policy should not incorporate terms that you recognise would invalidate or compromise the interests of the mortgage company
- you must approve the terms of the local search policy on behalf of the lender
| Lender | Requirement |
|---|---|
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| April Mortgages | An amount at least equal to the mortgage advance. |
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Coutts Finance | The open market value of the property according to the valuation report. |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| GE Money | GE Money Home Lending has withdrawn from the UK mortgage market. |
| 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. |
| Metro Bank | The open market value of the property according to the valuation report. |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| 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). |
| Perenna | The higher of the purchase price or valuation. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| 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. |
| RBS (One Account) | An amount equal to the value of the property. |
| Whistletree | The value of the property |
| Yorkshire Bank | Open market value of property. |
Local Search Contingency Insurance : Reflections
The full terms, conditions and exclusions for local search indemnity insurance are identified in the policy document. Conveyancing solicitors are obliged to direct the borrower to the local search indemnity insurance policy paperwork. Local Search Contingency insurance is designed to afford indemnity in respect of the risks set out in the policy schedule - so it’s important to check the schedule to ensure it is correct. The duration of this non-investment insurance contract is in perpetuity unless otherwise stated in the local search indemnity insurance policy. Adequacy in this regard should be checked.Local Search indemnity insurance: Significant characteristics and benefits:
This policy would usually provide protection from financial loss that might arise in the event of a third party making a cliam in respect of the risks identified in the policy document. Local Search indemnity insurance Policies should be checked for the following- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
- Market value reduction due to the successful enforcement of the risks specified in the local search indemnity insurance.
- All sums paid with consent in writing from the insurance company to liberate the property from the risks specified in the local search policy.
- Liability for damages or compensation incurred in any action concerning the risks specified in the local search policy, including legal and associated costs.
- The out of pocket expenses of altering or demolishing 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.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, prior to proceedings for the enforcement of the risks specified in the local search insurance, to the extent that such costs are rendered abortive by court decision.
Don't forget to check what is excluded from the local search insurance e.g. does the policy cover any residence that has been altered within the 12 months prior to the commencement of the policy? Does it cover legal costs?
Local Search Indemnity Insurance has limitations - Additional considerations
Local Search insurance may satisfy lenders such as Skipton or Yorkshire Building Society 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 mortgage company solicitor 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.