Obstruction of Right of Way Indemnity Insurance Mortgage Company conveyancing requirements
Birmingham Midshires and Yorkshire Bank Home Loans, in common with the majority of banks, have their own specific instructions when it comes to obstruction of right of way indemnity insurance. This page sets out to enlighten property law lawyers on the different lender solicitors panel where the title to be charged contains obstruction of right of way. It is not a alternative for checking the CML handbook requirements for each bank, for example Leeds Building Society, Halifax or Lloyds TSB. The information on this page Is not to be read as obstruction of right of way indemnity insurance advice.
Need help with obstruction of right of way indemnity insurance from your lender?
Coventry BS and HSBC like most mortgage companies, instructions are such that where obstruction of right of way indemnity insurance is to be taken out:
- the minimum level of cover for the policy must meet the requirements for the bank (See Part II Handbook requirements )
- the obstruction of right of way indemnity insurance policy must not incorporate conditions that you are aware would invalidate or prejudice the interests of the lender
- the obstruction of right of way indemnity insurance policy must be effected without cost to the mortgage company
- you is obliged to disclose to the insurer all relevant information which you have acquired
- you must approve the terms of the obstruction of right of way policy on behalf of the mortgage company
- the obstruction of right of way indemnity insurance policy must be in favor of the lender and, if possible, for the benefit of the mortgagor and any next owner or bank. If the mortgagor will not be covered by the obstruction of right of way indemnity insurance policy, the mortgagor should be informed accordingly.
- you must spell out to the borrower that the borrower will need to adhere to any conditions of the obstruction of right of way indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in respect of the insurance
- your firm must send a duplicate of the obstruction of right of way indemnity insurance to the borrower and explain to the mortgagor why the obstruction of right of way indemnity insurance policy was effected and that a further policy could be required if there is additional lending against the mortgaged property
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Adam & Company International | The open market value of the property according to the valuation report. |
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Bank of Scotland Private | [This lender has not published an answer to this question. Please contact the lender.]
|
| Britannia | Cover to the full value of the property. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Hinckley and Rugby | The policy must be for our benefit and for no less than the amount lent to the borrower, including retentions, stage payments and interest. |
| JPMorgan | 110% of principal sum. |
| Legal & General Home Finance | The policy should be for the full market value of the property and indexed linked. The policy must be for our benefit, and for the benefit of the borrower where available. The policy must benefit all successors and assigns. |
| Lloyds | The value of the property. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Paratus | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| 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). |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
| Zephyr Mortgages | 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 Obstruction of Right of Way indemnity insurance points to consider
The extent of the terms for obstruction of right of way indemnity insurance are set out in the policy document. Conveyancing Practitioners are obliged to direct your non-lender client to the obstruction of right of way indemnity insurance policy paperwork. Obstruction of Right of Way indemnity insurance is designed to afford indemnity in respect of the risks set out in the policy schedule - so you should check any draft to determine that it is as it should be. The continuance of this non-investment insurance contract is in perpetuity unless otherwise stated in the obstruction of right of way indemnity insurance policy. Again, please check that this is as you expected.Obstruction of Right of Way indemnity insurance: Important features and benefits:
This policy would usually provide protection from financial loss that might arise in the event of a third party making a cliam in respect of the risks identified in the policy document. Obstruction of Right of Way indemnity insurance Policies should be checked for the following- 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.
- Loss in market value due to the successful enforcement of the risks specified in the obstruction of right of way insurance.
- Cover for compensation incurred in any action concerning the risks specified in the obstruction of right of way insurance, including legal and associated costs.
- 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 begun, or contracted for, before the commencement of proceedings for the enforcement of the risks specified in the obstruction of right of way insurance, to the extent that such costs are rendered abortive by court order.
- All sums paid with the written consent of the insurance company to liberate the land from the risks specified in the obstruction of right of way policy.
You also need to be sure that the answers on the application form are accurate. Regardless of how remote a claim on the lender insurance policy might be you can certain that the insurer will check the details on any proposal form very carefully prior to any claim being met.
Obstruction of Right of Way Indemnity Insurance has limitations - Further considerations
Obstruction of Right of Way Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that obstruction of right of way indemnity cover will not necessarily be the right solution. Content on 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 obstruction of right of way 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 is in relation to properties in England and Wales.