Mortgage Company conveyancing panel requirements re Obstruction of Right of Way Indemnity Insurance
Skipton and Nationwide, like many banks, have their own requirements when it comes to obstruction of right of way indemnity insurance. This page sets out to enlighten conveyancing firms on the different lender solicitors panel where the title for the the property to be mortgaged includes obstruction of right of way. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each mortgage company, whether it be Godiva Mortgages, Yorkshire Building Society or Bank of Scotland. The content 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?
Halifax and Birmingham Midshires in common with the majority of banks, obligations require that where obstruction of right of way indemnity insurance is to be taken out:
- your firm must approve the terms of the obstruction of right of way policy on behalf of the lender
- you must supply a copy of the obstruction of right of way indemnity insurance to the mortgagor and explain to the mortgagor why the obstruction of right of way indemnity insurance policy was effected and that a further policy might be mandatory if there is further lending against the security of the property
- the obstruction of right of way indemnity insurance policy should be effected without expense to the mortgage company
- you must reveal to the insurer all relevant information which you have obtained
- the obstruction of right of way indemnity insurance policy needs to be for the benefit of the mortgage company and, if possible, in favour of the mortgagor and any subsequent owner or mortgage company. If the borrower will not be protected by the obstruction of right of way indemnity insurance policy, the borrower needs to be advised accordingly.
- the obstruction of right of way indemnity insurance policy should not incorporate terms which you are aware would void or compromise the interests of the bank
- your practice must explain to the mortgagor 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 relation to the policy
- the level of indemnity must meet the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
| Lender | Requirement |
|---|---|
| Aviva Equity Release | Full value of the property. |
| Bank of Ireland | The limit of indemnity must be an amount not less than the market 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. |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Chelsea 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. |
| Cynergy Bank | The market value of the property. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Kensington Mortgage | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Paragon Mortgages Ltd | 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. |
| Perenna | The higher of the purchase price or valuation. |
| 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 |
| 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. |
Non lender-specific considerations
The full terms, conditions and exclusions for obstruction of right of way indemnity insurance are identified in the policy document. Conveyancing Practitioners are obliged to point the borrower to the obstruction of right of way indemnity insurance policy itself. Obstruction of Right of Way Contingency insurance is devised to afford indemnity in respect of the risks set out in the policy schedule - so it is essential check any draft to determine that it is correct. The duration of this non-investment insurance agreement 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.Important aspects and benefits of obstruction of right of way Contingency insurance :
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- Loss in market value resulting from the successful enforcement of the risks specified in the obstruction of right of way insurance.
- Expenses for works (including architects’ and surveyors’ 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 indemnity 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 property from the risks specified in the obstruction of right of way indemnity insurance.
- Reimbursement for compensation incurred in any proceedings in respect of the risks specified in the obstruction of right of way policy, including legal and associated costs.
- 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.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
As is the case with all conventional insurance, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the obstruction of right of way policy will be invalidated.
Supplemental considerations for obstruction of right of way indemnity insurance
There may be consequences arising from the enforcement of the risks identified in the obstruction of right of way insurance which are not adequately covered by financial compensation. Content on this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company 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 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 above information is in relation to properties in England and Wales.