Obstruction of Right of Way Indemnity Insurance Mortgage Company conveyancing requirements
Virgin Money and Birmingham Midshires, as with the majority of mortgage companies, have their own requirements when it comes to obstruction of right of way indemnity insurance. The content herein aims to help residential conveyancing lawyers on the various mortgage company approved list of panel lawyers where the title to be charged includes obstruction of right of way. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each bank, be it Santander, Chelsea BS or Leeds Building Society. The content on this page is not focused on obstruction of right of way indemnity insurance requirements.
Need help with obstruction of right of way indemnity insurance from your lender?
Yorkshire Building Society and Skipton in common with the majority of banks, instructions are such that where obstruction of right of way indemnity insurance is effected:
- the obstruction of right of way indemnity insurance policy should be effected without charge to the lender
- your firm must provide a duplicate of the obstruction of right of way indemnity insurance to the mortgagor and explain to the borrower why the obstruction of right of way indemnity insurance policy was effected and that a further policy might be mandatory if there is supplemental borrowing against the mortgaged property
- your firm is duty bound to point out to the mortgagor that the borrower is obliged to comply with any conditions of the obstruction of right of way indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in respect of the insurance
- the obstruction of right of way indemnity insurance policy should not incorporate conditions which you recognise would void or compromise the interests of the mortgage company
- the limit of indemnity must satisfy the requirements for the lender (See Part II Handbook requirements )
- your firm is required to disclose to the insurer all relevant information which you have acquired
- your firm are responsible for approving the terms of the obstruction of right of way policy on behalf of the bank
- the obstruction of right of way indemnity insurance policy needs to be in favor of the mortgage company and, if possible, in favour of the mortgagor and any future registered proprietor or mortgagee. If the borrower will not be protected by the obstruction of right of way indemnity insurance policy, the borrower should be informed accordingly.
| Lender | Requirement |
|---|---|
| Allied Irish Bank | At least the amount of the mortgage advance. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Bradford & Bingley | Amount of loan + 15% |
| Coventry Building Society | Minimum of the value of the property. |
| Ecology Building Society | An amount equal to at least 110% of the mortgage advance |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| Halifax | An amount at least equal to the mortgage advance. |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Hampden | The open market value of the property according to the valuation report. |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Kensington Mortgage | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| Lloyds TSB Scotland | The value of the property |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Rely Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Saffron Building Society | Higher of purchase price or valuation. 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 |
| Ulster Bank | An amount equal to the value of the property. |
Non lender-specific considerations
The full terms, conditions and exclusions for obstruction of right of way indemnity insurance are shown in the policy document. Property lawyers are obliged to direct the borrower to the obstruction of right of way indemnity insurance policy paperwork. The intention of obstruction of right of way indemnity insurance is to afford indemnity in respect of the risks set out in the policy schedule - so you should check the schedule to determine that it is correct. The lifetime of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.Obstruction of Right of Way Contingency insurance: Important features and benefits:
The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the obstruction of right of way indemnity insurance schedule. Obstruction of Right of Way indemnity insurance Policies are likely to cover the following- Cover for compensation incurred in any proceedings in respect of the risks specified in the obstruction of right of way policy, as well as incurred costs and expenses.
- Expenses for works (including professional fees) for the purpose of the development begun, or contracted for, prior to proceedings for the enforcement of the risks specified in the obstruction of right of way policy, to the extent that such costs are rendered abortive by court order.
- 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.
- Money 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.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- Loss in market value due to the successful enforcement of the risks specified in the obstruction of right of way insurance.
You also need to be sure that the answers on the application form are correct. Regardless of how remote 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 prior to any claim being paid out.
Other considerations for obstruction of right of way indemnity insurance
Obstruction of Right of Way Indemnity insurance isn’t a solution to all of the relevant problems. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the lender conveyancing panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the mortgage company 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.