Indemnity Insurance of Obstruction of Right of Way Mortgage Company conveyancing obligations

Natwest and Santander, in common with most mortgage companies, have their own specific instructions when it comes to obstruction of right of way indemnity insurance. This page is designed to help residential conveyancing solicitors on the various lender conveyancing panel where the title to be charged includes obstruction of right of way. Solicitors should still check the CML handbook requirements for each bank, be it Birmingham Midshires, Barclays or Nationwide. 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?

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Yorkshire Bank Home Loans and Chelsea BS like most banks, obligations require that where obstruction of right of way indemnity insurance is effected:

• you must reveal to the insurer all relevant information which you have obtained
• your practice is duty bound to point out to the mortgagor that the borrower will need to comply with any conditions of the obstruction of right of way indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in relation to the insurance
• your practice must supply 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 may be necessary if there is further borrowing against the security of the property
• the obstruction of right of way indemnity insurance policy must not contain terms that you recognise would invalidate or prejudice the interests of the mortgage company
• the obstruction of right of way indemnity insurance policy must be placed on risk at no cost to the mortgage company
• you must approve the terms of the obstruction of right of way policy on behalf of the mortgage company
• the limit of indemnity must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
• the obstruction of right of way indemnity insurance policy needs to be in favor of the bank and, wherever possible, for the benefit of the mortgagor and any subsequent registered proprietor or mortgagee. If the mortgagor will not be covered by the obstruction of right of way indemnity insurance policy, the borrower must be advised accordingly.

As to the level of cover for the obstruction of right of way indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Section 9.2 of the Part 2 requirements for mortgage companies:

Obstruction of Right of Way Contingency Insurance : Reflections

The full terms, conditions and exclusions for obstruction of right of way indemnity insurance are set out in the policy document. Conveyancing Practitioners should 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 grant indemnity in respect of the risks set out in the policy schedule - so you should check the schedule to ensure it is correct. The lifetime 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.

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Significant features 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 are likely to cover the following

• Reimbursement for compensation incurred in any action regarding the risks specified in the obstruction of right of way indemnity insurance, including solicitors charges.
• All sums paid with consent in writing from the insurance company to liberate the land from the risks specified in the obstruction of right of way insurance.
• Loss in market value resulting from the successful enforcement of the risks specified in the obstruction of right of way indemnity insurance.
• 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.
• Expenses for works (including professional fees) for the purpose of the development started, prior to 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 decision.
• All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company

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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.

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Obstruction of Right of Way Indemnity Insurance has limitations - Other 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 answer.

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The above information covers to properties in England and Wales.