Mortgage Company conveyancing panel requirements re Missing Landlord Indemnity Insurance

Bank of Scotland and Natwest, as with the majority of mortgage companies, have their own specific instructions when it comes to missing landlord indemnity insurance. The content herein aims to help domestic conveyancing solicitors on the numerous lender conveyancing panel where the title for the the property to be mortgaged incorporates missing landlord. Lawyers are advised to familiarise themselves with the CML handbook requirements for each lender, whether it be Halifax, Leeds Building Society or Barnsley BS. The content on this page is not focused on missing landlord indemnity insurance requirements.

Need help with missing landlord indemnity insurance from your lender?

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Santander and Godiva Mortgages like the majority of banks, instructions are such that where missing landlord indemnity insurance is effected:

• the minimum level of cover for the policy must meet the requirements for the bank (See Part II Handbook requirements )
• the missing landlord indemnity insurance policy must be for the benefit of the mortgage company and, wherever possible, in favour of the borrower and any future registered proprietor or lender. Where the mortgagor will not be protected by the missing landlord indemnity insurance policy, the borrower needs to be informed accordingly.
• your firm are responsible for approving the terms of the missing landlord policy on behalf of the bank
• your firm must provide a duplicate of the missing landlord indemnity insurance to the mortgagor and explain to the mortgagor why the missing landlord indemnity insurance policy was effected and that additional insurance could be mandatory if there is additional lending against the mortgaged property
• the missing landlord indemnity insurance policy must be effected at no charge to the bank
• the missing landlord indemnity insurance policy must not incorporate conditions that you know would invalidate or compromise the interests of the bank
• your firm must disclose to the insurer all relevant information which you have acquired
• your firm must point out to the borrower that the borrower must 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 respect of the insurance

As to the level of cover for the missing landlord indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Section 9.2 of the Part 2 requirements for lenders:

General Missing Landlord indemnity insurance points to consider

The extent of the terms for missing landlord indemnity insurance are shown in the policy paperwork. Conveyancing Practitioners should direct your non-lender client to the missing landlord indemnity insurance policy itself. Missing Landlord indemnity insurance is designed to afford indemnity in respect of the risks specified in the policy schedule - so it is essential check the schedule to ensure it is as it should be. The continuance 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.

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Missing Landlord indemnity insurance: Significant characteristics 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. Missing Landlord indemnity insurance Cover normally includes

• All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
• The cost of altering or destroying 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 proceedings in respect of the risks specified in the missing landlord policy, as well as fees of a legal nature.
• All sums paid with consent in writing from the insurance company to liberate the property from the risks specified in the missing landlord policy.
• Diminution in value due to the successful enforcement of the risks specified in the missing landlord indemnity insurance.
• The cost of works (including professional fees) for the purpose of the development begun, or contracted for, 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 decision.

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You also need to be sure that the answers on the application form are accurate. However remote the likelihood of a claim on the lender insurance policy might be you can rest assured that the insurer will check the details on any proposal form very carefully before any claim is met.

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Additional considerations for missing landlord indemnity insurance

Missing Landlord insurance may satisfy lenders such as Nationwide or Accord 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.

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The content set out above is in relation to properties in England and Wales.