Indemnity Insurance of Local Search Mortgage Company conveyancing instructions
Natwest and Skipton, in common with most mortgage companies, set their own requirements when it comes to local search indemnity insurance. The purpose of this page to assist domestic conveyancing practitioners on the different lender approved list of panel lawyers where the title for the the property to be mortgaged incorporates local search. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each mortgage company, be it Nationwide, Chelsea BS or Leeds 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?
RBS and Birmingham Midshires like many lenders, requirements are that where local search indemnity insurance is to be put on risk:
- the local search indemnity insurance policy should not contain terms that you know would invalidate or prejudice the interests of the mortgage company
- the local search indemnity insurance policy should be effected at no cost to the lender
- your practice must supply 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 may be required if there is further lending against the security of the property
- you are responsible for approving the terms of the local search policy on behalf of the lender
- you is obliged to disclose to the insurer all relevant information which you have gathered
- the minimum level of cover for the policy must satisfy the requirements for the bank (See Part II Handbook requirements )
- your practice must spell out to the borrower that the borrower must 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 insurance
- the local search indemnity insurance policy should always be in favor of the lender and, if possible, for the benefit of the borrower and any future owner or mortgagee. Where 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 Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Clydesdale Bank | Open market value of property. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Coutts Finance | The open market value of the property according to the valuation report. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Ecology Building Society | An amount equal to at least 110% of the mortgage advance |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| 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. |
| 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. |
| 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. |
| Leeds Building Society | An amount at least equal to the amount of the mortgage advance plus 10%. Any indemnity insurance policy must protect the borrowers, any successor in title and any Mortgagee. |
| LendInvest | An amount at least equal to the valuation of the property. |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| Rely Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| Together Personal Finance | Minimum of £2,000,000.00 per claim. |
Local Search Contingency Insurance : Reflections
The full terms, conditions and exclusions for local search indemnity insurance are shown in the policy document. Conveyancing solicitors should point your non-lender client to the local search indemnity insurance policy document. Local Search Contingency insurance is designed to provide indemnity in respect of the risks set out in the policy schedule - so you should check the document to ensure it is correct. The continuance 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.Significant features and benefits of local search indemnity insurance :
Protection via such a policy is to cover the risk of third parties looking to enforce rights that can affect the use of a property. Local Search indemnity insurance Cover normally includes- Diminution in value due to the successful enforcement of the risks specified in the local search indemnity insurance.
- The cost of works (including professional 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.
- Liability for damages or compensation incurred in any action in respect of the risks specified in the local search policy, as well as legal and associated costs.
- 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.
- All ancillary 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 local search insurance.
As with any insurance policy, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the local search policy will be invalidated.
Supplemental considerations for local search indemnity insurance
Local Search Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that local search indemnity cover will not necessarily be the answer. Information provided on this webpage is for general information for conveyancers and solicitors in England and Wales on the the lender 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 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.