Local Search Indemnity Insurance Bank conveyancing requirements
Halifax and Chelsea BS, like the majority of banks, dictate their own requirements when it comes to local search indemnity insurance. This page sets out to enlighten conveyancing lawyers on the various bank solicitors panel where the title to be charged contains local search. It is not a substitute for checking the CML handbook requirements for each lender, whether it be Lloyds TSB, Virgin Money or Skipton. The information on this page is not focused on local search indemnity insurance requirements.
Need help with local search indemnity insurance from your lender?
Coventry BS and Godiva Mortgages like many mortgage companies, requirements are that where local search indemnity insurance is to be taken out:
- the local search indemnity insurance policy must not contain terms that you are aware would void or prejudice the interests of the lender
- the local search indemnity insurance policy should be effected at no expense to the lender
- you is obliged to reveal to the insurer all relevant information which you have acquired
- the minimum level of cover for the policy must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- the local search indemnity insurance policy should always be for the benefit of the bank and, if possible, in favour of the mortgagor and any future registered proprietor or mortgage company. Where the borrower will not be covered by the local search indemnity insurance policy, you must advise the borrower of this fact.
- your practice is duty bound to spell out to the borrower that the borrower will need to comply with any conditions of the local search indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in respect of the policy
- you must supply a duplicate 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 a further policy might be necessary if there is supplemental lending against the security of the property
- your firm are responsible for approving the terms of the local search policy on behalf of the bank
| 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. |
| April Mortgages | An amount at least equal to the mortgage advance. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Barclays plc | Higher of purchase price or valuation |
| Family Building Society | An amount at least equal to the mortgage advance. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Hampden | The open market value of the property according to the valuation report. |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Lloyds | The value of the property. |
| Metro Bank | The open market value of the property according to the valuation report. |
| National Westminster Bank | An amount equal to the value of the property. |
| 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). |
| Principality Building Society | Full market value of the property is preferred but if this is not available we will accept the loan advance amount as minimum. You must approve the policy on our behalf. The estimated property value is stated in the Mortgage Offer in remortgage cases. Otherwise it will be stipulated in the Valuation. |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| 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. |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| RBS (One Account) | An amount equal to the value of the property. |
| Yorkshire Bank | Open market value of property. |
Local Search Contingency Insurance : Reflections
The extent of the terms for local search indemnity insurance are explained in the policy document. Conveyancing Practitioners are obliged to direct the borrower to the local search indemnity insurance policy document. The intention of local search indemnity insurance is to afford indemnity in respect of the risks specified in the policy schedule - so it’s important to check the schedule to ensure it is in order. The lifetime of this non-investment insurance contract is in perpetuity unless otherwise stated in the local search indemnity insurance policy. It is well worth checking that the time frame is correct.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 Policies should be checked for the following- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
- The cost 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.
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development commenced, 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 decision.
- Cover for compensation incurred in any proceedings in respect of the risks specified in the local search policy, as well as incurred costs and expenses.
- All sums paid with the written consent of the insurance company to free the land from the risks specified in the local search insurance.
- Diminution in value resulting from the successful enforcement of the risks specified in the local search insurance.
Due diligence should extend to checking that the answers on the application form are accurate. Regardless of how remote a claim on the lender insurance policy might be you can certain that the insurer will check the details on any proposal form thoroughly prior to any claim being met.
Local Search Indemnity Insurance has limitations - Further considerations
There may be consequences arising from the enforcement of the risks identified in the local search insurance which are not adequately covered by financial compensation. Content on this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company conveyancing panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the lender 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.