Indemnity Insurance of Missing Landlord Bank conveyancing instructions
Barclays and Halifax, like the majority of mortgage companies, set their own specific instructions when it comes to missing landlord indemnity insurance. The purpose of this page to assist property law practitioners on the various bank solicitors panel where the title to be charged contains missing landlord. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each lender, whether it be Birmingham Midshires, Lloyds TSB or Skipton. The information on this page is not focused on missing landlord indemnity insurance requirements.
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Accord and Natwest as with most mortgage companies, instructions are such that where missing landlord indemnity insurance is to be taken out:
- the missing landlord indemnity insurance policy must be in favor of the lender and, if possible, in favour of the mortgagor and any next owner or mortgagee. If the borrower will not be covered by the missing landlord indemnity insurance policy, you must advise the borrower of this fact.
- the limit of indemnity must meet the requirements for the bank (See Part II Handbook requirements )
- your practice must provide a copy of the missing landlord indemnity insurance to the mortgagor and explain to the borrower why the missing landlord indemnity insurance policy was effected and that a further policy might be necessary if there is additional borrowing against the security of the property
- the missing landlord indemnity insurance policy should not incorporate terms that you know would void or compromise the interests of the lender
- your practice are responsible for approving the terms of the missing landlord policy on behalf of the bank
- your practice must point out to the mortgagor that the borrower is obliged to adhere to any conditions of the missing landlord indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in relation to the policy
- the missing landlord indemnity insurance policy must be placed on risk at no cost to the bank
- your firm is required to reveal to the insurer all relevant information which you have acquired
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Allied Irish Bank | At least the amount of the mortgage advance. |
| Aviva Equity Release | Full value of the property. |
| 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. |
| Family Building Society | An amount at least equal to the mortgage advance. |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| GE Money | GE Money Home Lending has withdrawn from the UK mortgage market. |
| Godiva Mortgages | Minimum of the value of the property. |
| Holmesdale Building Society | 110% |
| JPMorgan | 110% of principal sum. |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the advance. |
| 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. |
| New Street Mortgages | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| 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. |
| 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. |
| Yorkshire Bank | Open market value of 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. |
Missing Landlord Contingency Insurance : Reflections
The full terms, conditions and exclusions for missing landlord indemnity insurance are explained in the policy paperwork. Property lawyers should direct the borrower to the missing landlord indemnity insurance policy document. Missing Landlord 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 correct. The continuance of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.Missing Landlord indemnity insurance: Significant characteristics and benefits:
The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the missing landlord indemnity insurance schedule. Missing Landlord indemnity insurance Policies should be checked for the following- Loss in market value resulting from the successful enforcement of the risks specified in the missing landlord indemnity insurance.
- Reimbursement for compensation incurred in any action concerning the risks specified in the missing landlord indemnity insurance, as well as fees of a legal nature.
- 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.
- Money paid with consent in writing from the insurance company to liberate the property from the risks specified in the missing landlord insurance.
- Expenses for 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 landlord insurance, to the extent that such costs are rendered abortive by court order.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
Always consider what is not included in the missing landlord policy e.g. does the policy cover any property that has been altered within the 12 months prior to the policy being put on risk? Are legal costs covered?
Additional considerations for missing landlord indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from missing landlord insurance may be adequate for your client. Content on this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company solicitor 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 missing landlord 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.