Indemnity Insurance of Lost Documents Lender conveyancing instructions
Barclays and Santander, like many lenders, dictate their own specific instructions when it comes to lost documents indemnity insurance. This page sets out to enlighten conveyancing firms on the different lender solicitors panel where the title for the the property to be mortgaged incorporates lost documents. It is not a substitute for checking the CML handbook requirements for each bank, whether it be Lloyds TSB, Skipton or Barnsley BS. The information on this page Is not to be read as lost documents indemnity insurance advice.
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Leeds Building Society and Bank of Scotland as with the majority of mortgage companies, obligations require that where lost documents indemnity insurance is to be taken out:
- the lost documents indemnity insurance policy should always be in favor of the lender and, if possible, in favour of the borrower and any next owner or mortgage company. Where the mortgagor will not be protected by the lost documents indemnity insurance policy, you must advise the mortgagor of this fact.
- your practice must supply a duplicate of the lost documents indemnity insurance to the borrower and explain to the borrower why the lost documents indemnity insurance policy was effected and that a further policy may be mandatory if there is additional borrowing against the security of the property
- the lost documents indemnity insurance policy should be placed on risk at no charge to the lender
- your practice is duty bound to spell out to the borrower that the borrower is obliged to comply with any conditions of the lost documents indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the insurance
- the level of indemnity must meet the requirements for the bank (See Part II Handbook requirements )
- the lost documents indemnity insurance policy must not contain conditions which you are aware would void or prejudice the interests of the mortgage company
- you are responsible for approving the terms of the lost documents policy on behalf of the lender
- your practice must reveal to the insurer all relevant information which you have obtained
| Lender | Requirement |
|---|---|
| Allied Irish Bank | At least the amount of the mortgage advance. |
| Coutts & Co | The open market value of the property according to the valuation report. |
| Coventry Building Society | Minimum of the value of the property. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Harpenden Building Society | 110% of mortgage advance |
| Hodge Equity Release | 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. |
| Lloyds Bank Private Banking | Not less than the Facility plus 10%. |
| NRAM Ltd | Preference for full market value of the property, but if this level of cover is not available, will accept a minimum of the actual loan amount. You must approve the policy on our behalf. |
| National Westminster Bank | An amount equal to the value of the property. |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Platform | 110% of principal sum. |
| 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. |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| Royal Bank of Scotland | An amount equal to the value of the property. |
| RBS (One Account) | 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. |
Lost Documents Contingency Insurance : Reflections
The full terms, conditions and exclusions for lost documents indemnity insurance are shown in the policy paperwork. Property lawyers should direct the borrower to the lost documents indemnity insurance policy paperwork. The intention of lost documents indemnity insurance is to afford indemnity in respect of the risks specified in the policy schedule - so it is essential check the schedule to determine that it is correct. The lifetime 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.Lost Documents indemnity insurance: Important 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 are likely to cover the following- 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.
- Loss in market value resulting from the successful enforcement of the risks specified in the lost documents policy.
- All sums paid with consent in writing from the insurance company to liberate the land from the risks specified in the lost documents indemnity insurance.
- Reimbursement for compensation incurred in any proceedings regarding the risks specified in the lost documents indemnity insurance, as well as fees of a legal nature.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Expenses for 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 insurance, to the extent that such costs are rendered abortive by court decision.
Due diligence should extend to checking that the answers on the application form are accurate. Regardless of how remote a claim on the mortgage company insurance policy might be you can be sure that the insurer will check the details on any proposal form very carefully prior to any claim being paid out.
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 right solution. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the lender conveyancing 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 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 covers to properties in England and Wales.