Mortgage Company conveyancing panel requirements re Lost Documents Indemnity Insurance
Godiva Mortgages and Nationwide, as with the majority of lenders, have their own specific instructions when it comes to lost documents indemnity insurance. The purpose of this page to assist residential conveyancing solicitors on the numerous bank conveyancing panel where the title to be charged incorporates lost documents. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each bank, whether it be Barclays, Leeds Building Society or Birmingham Midshires. The information on this page Is not to be read as lost documents indemnity insurance advice.
Need help with lost documents indemnity insurance from your lender?
Accord and Bank of Scotland like most mortgage companies, obligations require that where lost documents indemnity insurance is effected:
- the lost documents indemnity insurance policy needs to be for the benefit of the lender and, wherever possible, in favour of the mortgagor and any subsequent owner or lender. If the mortgagor will not be protected by the lost documents indemnity insurance policy, you must advise the borrower of this fact.
- you must approve the terms of the lost documents policy on behalf of the lender
- your firm is required 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 mortgage company (See Part II Handbook requirements )
- you is duty bound to spell out to the mortgagor that the borrower must adhere to any conditions of the lost documents indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in relation to the insurance
- your practice must supply a duplicate of the lost documents indemnity insurance to the mortgagor and explain to the borrower why the lost documents indemnity insurance policy was effected and that additional insurance might be mandatory if there is additional lending against the security of the property
- the lost documents indemnity insurance policy must not incorporate conditions which you are aware would void or compromise the interests of the bank
- the lost documents indemnity insurance policy should be placed on risk at no cost to the bank
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| 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. |
| Aviva Equity Release | Full value of the property. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Barclays plc | Higher of purchase price or valuation |
| 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 |
| Habito | Higher of purchase price or valuation |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Holmesdale Building Society | 110% |
| 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. |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| TSB | 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. |
General Lost Documents indemnity insurance points to consider
The full terms, conditions and exclusions for lost documents indemnity insurance are shown in the policy paperwork. Conveyancing solicitors are obliged to direct the borrower to the lost documents indemnity insurance policy itself. The intention of lost documents indemnity insurance is to grant indemnity in respect of the risks specified in the policy schedule - so it’s important to check any draft to ensure it is in order. The lifetime of this non-investment insurance contract is in perpetuity unless otherwise stated in the lost documents indemnity insurance policy. It is well worth checking that the time frame is correct.Lost Documents Contingency insurance: Significant features 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. Lost Documents indemnity insurance Policies should be checked for the following- The cost of works (including professional fees) for the purpose of the development commenced, prior to proceedings for the enforcement of the risks specified in the lost documents indemnity insurance, to the extent that such costs are rendered abortive by court order.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- Reimbursement for compensation incurred in any action in respect of the risks specified in the lost documents insurance, as well as fees of a legal nature.
- Market value reduction due to the successful enforcement of the risks specified in the lost documents indemnity insurance.
- All sums paid with the written consent of the insurance company to free the land from the risks specified in the lost documents insurance.
- The cost 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.
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 lost documents policy will not be valid.
Lost Documents Indemnity Insurance has limitations - Additional considerations
Lost Documents 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 lost documents 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 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 lost documents 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.