Outstanding Leasehold Interest Indemnity Insurance Lender conveyancing requirements

Nationwide and Skipton, as with many banks, have their own specific instructions when it comes to outstanding leasehold interest indemnity insurance. The purpose of this page to assist property law lawyers on the different mortgage company conveyancing panel where the title to be charged contains outstanding leasehold interest. It is not a alternative for checking the CML handbook requirements for each lender, whether it be Yorkshire Bank Home Loans, Birmingham Midshires or RBS. The information on this page Is not to be read as outstanding leasehold interest indemnity insurance advice.

Need help with outstanding leasehold interest indemnity insurance from your lender?

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Halifax and Barclays as with the majority of mortgage companies, requirements are that where outstanding leasehold interest indemnity insurance is to be taken out:

• the outstanding leasehold interest indemnity insurance policy should not contain conditions which you are aware would invalidate or prejudice the interests of the bank
• you is obliged to disclose to the insurer all relevant information which you have gathered
• the outstanding leasehold interest indemnity insurance policy needs to be in favor of the mortgage company and, wherever possible, in favour of the mortgagor and any next registered proprietor or mortgage company. Where the borrower will not be covered by the outstanding leasehold interest indemnity insurance policy, you must advise the mortgagor of this fact.
• the outstanding leasehold interest indemnity insurance policy must be effected at no charge to the bank
• the limit of indemnity must meet the requirements for the mortgage company (See Part II Handbook requirements )
• your firm is duty bound to explain to the borrower that the borrower will need to adhere to any conditions of the outstanding leasehold interest indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the insurance
• you are responsible for approving the terms of the outstanding leasehold interest policy on behalf of the mortgage company
• your practice must supply a copy of the outstanding leasehold interest indemnity insurance to the mortgagor and explain to the borrower why the outstanding leasehold interest indemnity insurance policy was effected and that a further policy might be mandatory if there is further borrowing against the mortgaged property

As to the level of cover for the outstanding leasehold interest indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Section 9.2 of the CML handbook PII requirements for lenders:

Non lender-specific considerations

The extent of the terms for outstanding leasehold interest indemnity insurance are set out in the policy document. Property lawyers should direct your non-lender client to the outstanding leasehold interest indemnity insurance policy itself. The intention of outstanding leasehold interest indemnity insurance is to grant 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 correct. The continuance of this non-investment insurance agreement is in perpetuity unless otherwise stated in the outstanding leasehold interest indemnity insurance policy. It is well worth checking that the time frame is correct.

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Significant characteristics and benefits of outstanding leasehold interest Contingency insurance :

Protection via such a policy is to cover the risk of third parties looking to enforce rights that can affect the use of a property. Outstanding Leasehold Interest indemnity insurance Policies should be checked for the following

• Reimbursement for compensation incurred in any proceedings in respect of the risks specified in the outstanding leasehold interest insurance, as well as fees of a legal nature.
• Diminution in value due to the successful enforcement of the risks specified in the outstanding leasehold interest policy.
• 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 begun, or contracted for, before the commencement of proceedings for the enforcement of the risks specified in the outstanding leasehold interest insurance, to the extent that such costs are rendered abortive by court decision.
• All other costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
• Money paid with consent in writing from the insurance company to liberate the property from the risks specified in the outstanding leasehold interest policy.

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You also need to be sure that the answers on the application form are accurate. Regardless of how remote a claim on the bank insurance policy might be you can be sure that the insurer will check the details on any proposal form thoroughly prior to any claim being paid out.

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Further considerations for outstanding leasehold interest indemnity insurance

Outstanding Leasehold Interest insurance may satisfy lenders such as Virgin Money or Chelsea BS and prevent clients from from suffering financially but it cannot compensate for the stress and inconvenience the emotional suffering - after all the value of a home cannot always be measured in cash in the eyes of the owner.

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The content set out above is in relation to properties in England and Wales.