Mortgage Company conveyancing panel requirements re Missing Landlord Indemnity Insurance
Nationwide and Barnsley BS, in common with many banks, dictate their own requirements when it comes to missing landlord indemnity insurance. The content herein aims to help conveyancing firms on the different bank approved list of panel lawyers where the title to be charged includes missing landlord. Lawyers are advised to familiarise themselves with the CML handbook requirements for each bank, for example RBS, Santander or Skipton. The content on this page is not focused on missing landlord indemnity insurance requirements.
Need help with missing landlord indemnity insurance from your lender?
Accord and Birmingham Midshires in common with many lenders, obligations require that where missing landlord indemnity insurance is to be taken out:
- you is obliged to reveal to the insurer all relevant information which you have acquired
- your firm must explain to the mortgagor that the borrower will need to adhere to any conditions of the missing landlord indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in relation to the insurance
- the level of indemnity must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- your practice must provide a copy of the missing landlord indemnity insurance to the borrower and explain to the mortgagor why the missing landlord indemnity insurance policy was effected and that additional insurance could be necessary if there is further lending against the mortgaged property
- the missing landlord indemnity insurance policy should not incorporate terms which you recognise would void or compromise the interests of the mortgage company
- the missing landlord indemnity insurance policy should always be in favor of the lender and, if possible, for the benefit of the mortgagor and any next owner or lender. Where the borrower will not be protected by the missing landlord indemnity insurance policy, the borrower should be informed accordingly.
- your practice are responsible for approving the terms of the missing landlord policy on behalf of the lender
- the missing landlord indemnity insurance policy should be effected at no cost to the mortgage company
| 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. |
| 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 Scotland | Not less than mortgage advance plus 10% |
| Coutts & Co | The open market value of the property according to the valuation report. |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Furness Building Society | Property valuation or purchase price, whichever 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. |
| Intelligent Finance | 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. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| National Westminster Bank | An amount equal to the value of the property. |
| New Street Mortgages | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Reliance Bank | \xA31,000,000.00 |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| Scottish Widows | The value of the property. |
| 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). |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| TSB | The value of the property |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
| 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. |
General Missing Landlord indemnity insurance points to consider
The extent of the terms for missing landlord indemnity insurance are explained in the policy paperwork. Conveyancing solicitors should direct your non-lender client to the missing landlord indemnity insurance policy document. The intention of missing landlord indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so it’s important to check the schedule to determine that 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.Missing Landlord Contingency insurance: Important aspects and benefits:
The insurance 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- Diminution in value resulting from the successful enforcement of the risks specified in the missing landlord policy.
- Liability for damages or compensation incurred in any action regarding the risks specified in the missing landlord policy, as well as fees of a legal nature.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- All sums paid with the written consent of the insurance company to free the land from the risks specified in the missing landlord policy.
- The out of pocket expenses 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.
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development commenced, prior to proceedings for the enforcement of the risks specified in the missing landlord indemnity insurance, to the extent that such costs are rendered abortive by court order.
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 landlord policy will not be valid.
Missing Landlord Indemnity Insurance has limitations - Further considerations
Missing Landlord Indemnity insurance isn’t a solution to all of the relevant problems. Information provided on this webpage is for general information for Regulated law firms in England and Wales on the the bank conveyancing 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 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 content set out above covers to properties in England and Wales.