Local Search Indemnity Insurance Lender conveyancing requirements
Lloyds TSB and Halifax, like most mortgage companies, dictate their own requirements when it comes to local search indemnity insurance. This page sets out to enlighten property law firms on the different mortgage company approved list of panel lawyers where the title to be charged contains local search. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each bank, whether it be Accord, Virgin Money or Yorkshire Bank Home Loans. The content on this page Is not to be read as local search indemnity insurance advice.
Need help with local search indemnity insurance from your lender?
Natwest and Barnsley BS like the majority of mortgage companies, requirements are that where local search indemnity insurance is effected:
- the local search indemnity insurance policy should always be in favor of the mortgage company and, wherever possible, in favour of the borrower and any next registered proprietor or bank. Where the mortgagor will not be covered by the local search indemnity insurance policy, you must advise the borrower of this fact.
- the local search indemnity insurance policy should be placed on risk without cost to the lender
- the minimum level of cover for the policy must meet the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- your firm must provide a duplicate of the local search indemnity insurance to the mortgagor and explain to the borrower why the local search indemnity insurance policy was effected and that a further policy could be necessary if there is further borrowing against the security of the property
- the local search indemnity insurance policy must not contain terms that you are aware would void or compromise the interests of the bank
- 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 bank of any notice or potential claim in relation to the insurance
- your practice are responsible for approving the terms of the local search policy on behalf of the mortgage company
- your firm is obliged to disclose to the insurer all relevant information which you have gathered
| Lender | Requirement |
|---|---|
| Aldermore Bank | 110% of the purchase price or valuation, whichever is greater. 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). Where a property is being sold at undervalue and an equity gift is being provided, the conveyancer must ensure the seller obtains an Insolvency Act Indemnity Insurance Policy and provides evidence to you, so that you are comfortable an appropriate policy is in place to Aldermore’s satisfaction. This indemnity insurance aims to cover Aldermore against any future claims by creditors of the seller that may challenge the sale. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| 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. |
| Bradford & Bingley | Amount of loan + 15% |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Investec | The open market value of the property according to the valuation report. |
| JPMorgan | 110% of principal sum. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| Metro Bank | The open market value of the property according to the valuation report. |
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| 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. |
| 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). |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| RBS- First Active | An amount equal to the value of the property. |
| Whistletree | The value of the property |
Local Search Contingency Insurance : Reflections
The extent of the terms for local search indemnity insurance are identified in the policy paperwork. Property lawyers are obliged to point your non-lender client to the local search indemnity insurance policy itself. The intention of local search indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so you should check any draft to determine that it is in order. The continuance of this non-investment insurance agreement is in perpetuity unless otherwise stated in the local search indemnity insurance policy. Adequacy in this regard should be checked.Local Search indemnity insurance: Important aspects and benefits:
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 Policies are likely to cover the following- 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.
- Loss in market value resulting from the successful enforcement of the risks specified in the local search policy.
- Money paid with consent in writing from the insurance company to free the land from the risks specified in the local search insurance.
- Cover for compensation incurred in any action in respect of the risks specified in the local search policy, as well as solicitors charges.
- Expenses for 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.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
You also need to be sure that the answers on the application form are accurate. Regardless of how remote a claim on the bank insurance policy might be you can certain that the insurer will check the details on any proposal form thoroughly prior to any claim being paid out.
Further considerations for local search indemnity insurance
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. Information provided on this webpage is for general information for conveyancers and solicitors in England and Wales on the the bank 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.