Lender conveyancing panel requirements re Missing Deeds Indemnity Insurance
Chelsea BS and Nationwide, as with the majority of banks, set their own specific instructions when it comes to missing deeds indemnity insurance. This page sets out to enlighten property law firms on the various bank conveyancing panel where the title to be charged incorporates missing deeds. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each bank, be it Natwest, Virgin Money or Coventry BS. The information on this page is not focused on missing deeds indemnity insurance requirements.
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RBS and Barclays as with the majority of mortgage companies, requirements are that where missing deeds indemnity insurance is effected:
- your practice must send a copy of the missing deeds indemnity insurance to the borrower and explain to the borrower why the missing deeds indemnity insurance policy was effected and that a further policy may be necessary if there is further lending against the mortgaged property
- the minimum level of cover for the policy must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
- you must approve the terms of the missing deeds policy on behalf of the bank
- the missing deeds indemnity insurance policy should be effected without cost to the bank
- you must point out to the mortgagor that the borrower must comply with any conditions of the missing deeds indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in relation to the insurance
- you is required to disclose to the insurer all relevant information which you have gathered
- the missing deeds indemnity insurance policy should not incorporate conditions that you recognise would invalidate or compromise the interests of the lender
- the missing deeds indemnity insurance policy must be in favor of the lender and, if possible, for the benefit of the borrower and any next registered proprietor or mortgage company. Where the borrower will not be protected by the missing deeds indemnity insurance policy, the borrower needs to be informed accordingly.
| Lender | Requirement |
|---|---|
| Adam & Company International | 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. |
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Coventry Building Society | Minimum of the value of the property. |
| Halifax | An amount at least equal to the mortgage advance. |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Leeds Building Society | An amount at least equal to the amount of the mortgage advance plus 10%. Any indemnity insurance policy must protect the borrowers, any successor in title and any Mortgagee. |
| Magellan Homeloans | At least equal to the value of the property |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Rely Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
| 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. |
Missing Deeds Contingency Insurance : Reflections
The extent of the terms for missing deeds indemnity insurance are identified in the policy paperwork. Conveyancing Practitioners are obliged to direct your non-lender client to the missing deeds indemnity insurance policy paperwork. The intention of missing deeds indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so you should check the schedule to ensure it is in order. The duration of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.Significant features and benefits of missing deeds Contingency insurance :
The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the missing deeds indemnity insurance schedule. Missing Deeds indemnity insurance Policies are likely to cover the following- Market value reduction due to the successful enforcement of the risks specified in the missing deeds insurance.
- All sums paid with the written consent of the insurance company to liberate the land from the risks specified in the missing deeds indemnity 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.
- Liability for damages or compensation incurred in any action concerning the risks specified in the missing deeds insurance, including legal and associated costs.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development commenced, before the commencement of proceedings for the enforcement of the risks specified in the missing deeds indemnity insurance, to the extent that such costs are rendered abortive by court decision.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
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 missing deeds policy will not be valid.
Missing Deeds Indemnity Insurance has limitations - Supplemental considerations
Missing Deeds insurance may satisfy lenders such as Skipton or Halifax 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 provided on this webpage is for general information for Regulated law firms in England and Wales on the the lender 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 missing deeds 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.