Indemnity Insurance of Local Search Bank conveyancing requirements
Bank of Scotland and Chelsea BS, in common with most mortgage companies, set their own specific instructions when it comes to local search indemnity insurance. This page is designed to help conveyancing practitioners on the numerous lender solicitors panel where the title for the the property to be mortgaged contains local search. It is not a substitute for checking the CML handbook requirements for each bank, be it RBS, Coventry BS or Birmingham Midshires. 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?
Accord and Lloyds TSB in common with most lenders, requirements are that where local search indemnity insurance is effected:
- the minimum level of cover for the policy must meet the requirements for the mortgage company (See Part II Handbook requirements )
- your firm must approve the terms of the local search policy on behalf of the mortgage company
- you is duty bound to explain to the mortgagor that the borrower is obliged to 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 respect of the insurance
- the local search indemnity insurance policy must be for the benefit of the mortgage company and, if possible, in favour of the borrower and any next registered proprietor or mortgage company. If the mortgagor will not be covered by the local search indemnity insurance policy, you must advise the borrower of this fact.
- your firm is obliged to disclose to the insurer all relevant information which you have obtained
- the local search indemnity insurance policy should not incorporate conditions that you are aware would void or compromise the interests of the lender
- the local search indemnity insurance policy must be effected at no charge to the bank
- 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 additional insurance might be necessary if there is supplemental lending against the security of the property
| Lender | Requirement |
|---|---|
| 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. |
| Clydesdale Bank | Open market value of property. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Ecology Building Society | An amount equal to at least 110% of the mortgage advance |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| JPMorgan | 110% of principal sum. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| Manchester Building Society | Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Paragon Mortgages Ltd | An amount at least equal to the stated 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). |
| 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). |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| RBS - Direct Line | An amount equal to the value of the property. |
| RBS (One Account) | An amount equal to the value of the property. |
| RBS - Virgin One | An amount equal to the value of the property. |
| Ulster Bank | An amount equal to the value of the property. |
| Yorkshire 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. |
Non lender-specific considerations
The full terms, conditions and exclusions for local search indemnity insurance are shown in the policy document. Property lawyers are obliged to direct your non-lender client to the local search indemnity insurance policy document. The intention of local search indemnity insurance is to grant indemnity in respect of the risks set out in the policy schedule - so it is essential check the document to determine that it is in order. The continuance of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. 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 Cover normally includes- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- Money paid with consent in writing from the insurance company to free the property from the risks specified in the local search insurance.
- 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.
- Market value reduction due to the successful enforcement of the risks specified in the local search insurance.
- Reimbursement for compensation incurred in any proceedings in respect of the risks specified in the local search insurance, including fees of a legal nature.
- Expenses for 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 policy, to the extent that such costs are rendered abortive by court order.
Always consider what is excluded from the local search insurance e.g. does the policy cover any property that has been altered within the year prior to the commencement of the policy? Does it cover legal costs?
Local Search Indemnity Insurance has limitations - Other considerations
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 Regulated law firms 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 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 above information is in relation to properties in England and Wales.