Indemnity Insurance of Mining and Mineral Rights Lender conveyancing requirements
Chelsea BS and Halifax, in common with most banks, set their own specific instructions when it comes to mining and mineral rights indemnity insurance. This page is designed to help domestic conveyancing lawyers on the various mortgage company conveyancing panel where the title for the the property to be mortgaged includes mining and mineral rights. Solicitors should still check the CML handbook requirements for each lender, be it Barclays, Bank of Scotland or Santander. The information on this page is not focused on mining and mineral rights indemnity insurance requirements.
Need help with mining and mineral rights indemnity insurance from your lender?
Leeds Building Society and HSBC as with most lenders, obligations require that where mining and mineral rights indemnity insurance is effected:
- your practice is required to reveal to the insurer all relevant information which you have obtained
- the mining and mineral rights indemnity insurance policy must not contain terms that you know would void or prejudice the interests of the bank
- the mining and mineral rights indemnity insurance policy should be placed on risk at no charge to the bank
- your practice must provide a duplicate of the mining and mineral rights indemnity insurance to the mortgagor and explain to the mortgagor why the mining and mineral rights indemnity insurance policy was effected and that a further policy might be mandatory if there is supplemental borrowing against the security of the property
- your practice must approve the terms of the mining and mineral rights policy on behalf of the bank
- the mining and mineral rights indemnity insurance policy needs to be for the benefit of the bank and, if possible, for the benefit of the mortgagor and any subsequent owner or bank. Where the borrower will not be protected by the mining and mineral rights indemnity insurance policy, the mortgagor needs to be advised accordingly.
- the level of indemnity must meet the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- your firm is duty bound to spell out to the borrower that the borrower is obliged to adhere to any conditions of the mining and mineral rights indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in respect of the policy
| Lender | Requirement |
|---|---|
| Accord Buy to Let | 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. |
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| Allied Irish Bank | At least the amount of the mortgage advance. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| 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 |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Godiva Mortgages | Minimum of the value of the property. |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| 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. |
| 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. |
| Holmesdale Building Society | 110% |
| LendInvest | An amount at least equal to the valuation of the property. |
| Magellan Homeloans | At least equal to the value of the property |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| 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). |
| Topaz Finance | Valuation or purchase price, whichever is higher. The policy must always benefit the borrower and any subsequent owner or mortgagee - the policy must be index linked. |
| Ulster Bank | An amount equal to the value of the property. |
Non lender-specific considerations
The extent of the terms for mining and mineral rights indemnity insurance are set out in the policy document. Conveyancing Practitioners are obliged to point the borrower to the mining and mineral rights indemnity insurance policy document. Mining and Mineral Rights Contingency insurance is devised to grant indemnity in respect of the risks set out in the policy schedule - so it’s important to check the schedule to ensure it is in order. The lifetime 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.Mining and Mineral Rights Contingency insurance: Important characteristics and benefits:
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the mining and mineral rights indemnity insurance schedule. Mining and Mineral Rights indemnity insurance Policies are likely to cover the following- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- 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 mining and mineral rights insurance, to the extent that such costs are rendered abortive by court order.
- 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.
- Cover for compensation incurred in any action regarding the risks specified in the mining and mineral rights insurance, as well as legal and associated costs.
- Diminution in value due to the successful enforcement of the risks specified in the mining and mineral rights indemnity insurance.
- Money paid with consent in writing from the insurance company to liberate the land from the risks specified in the mining and mineral rights insurance.
Always check what is excluded from the mining and mineral rights indemnity insurance e.g. does the policy cover any residence that has been altered within the year prior to the policy being put on risk? Are legal costs covered?
Mining and Mineral Rights Indemnity Insurance has limitations - Further considerations
Mining and Mineral Rights insurance may satisfy lenders such as Accord or Virgin Money and prevent clients from from suffering financially but it cannot compensate for the stress and inconvenience the emotional suffering - after all the value of a home cannot always be measured in cash in the eyes of the owner. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the bank solicitor 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 mining and mineral rights 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 covers to properties in England and Wales.