Lender conveyancing panel requirements re Outstanding Leasehold Interest Indemnity Insurance
Barclays and Yorkshire Bank Home Loans, like many mortgage companies, have their own requirements when it comes to outstanding leasehold interest indemnity insurance. This page is designed to help property law lawyers on the different bank approved list of panel lawyers where the title to be charged incorporates outstanding leasehold interest. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each bank, for example Bank of Scotland, Skipton or Chelsea BS. The content on this page is not focused on outstanding leasehold interest indemnity insurance requirements.
Need help with outstanding leasehold interest indemnity insurance from your lender?
HSBC and Godiva Mortgages like many lenders, instructions are such that where outstanding leasehold interest indemnity insurance is effected:
- the outstanding leasehold interest indemnity insurance policy must not incorporate conditions which you are aware would invalidate or prejudice the interests of the bank
- the outstanding leasehold interest indemnity insurance policy should be placed on risk at no expense to the bank
- you is required to reveal to the insurer all relevant information which you have acquired
- your firm must explain to the borrower that the borrower will need to comply with any conditions of the outstanding leasehold interest indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in respect of the policy
- the outstanding leasehold interest indemnity insurance policy must be in favor of the lender and, if possible, for the benefit of the borrower and any subsequent registered proprietor or bank. Where the borrower will not be covered by the outstanding leasehold interest indemnity insurance policy, the borrower needs to be advised accordingly.
- the minimum level of cover for the policy must meet the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- you must supply a copy of the outstanding leasehold interest indemnity insurance to the borrower and explain to the borrower why the outstanding leasehold interest indemnity insurance policy was effected and that additional insurance could be mandatory if there is further borrowing against the mortgaged property
- your firm must approve the terms of the outstanding leasehold interest policy on behalf of the lender
| Lender | Requirement |
|---|---|
| Accord Buy to Let | 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. |
| Allied Irish Bank | At least the amount of the mortgage advance. |
| Barclays plc | Higher of purchase price or valuation |
| Clydesdale Bank | Open market value of property. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Family Building Society | An amount at least equal to the mortgage advance. |
| Halifax | An amount at least equal to the mortgage advance. |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Hodge Equity Release | An amount equal to the purchase price or value, whichever is higher. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage, the borrower(s) and any successor in Title. |
| JPMorgan | 110% of principal sum. |
| Lloyds | The value of the property. |
| Molo Finance Buy to Let | 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 mortgages. |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the advance. |
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Nedbank | You are to refer to us for specific instructions on any matter involving indemnity insurance. |
| Rely Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| Yorkshire Bank | Open market value of property. |
General Outstanding Leasehold Interest indemnity insurance points to consider
The full terms, conditions and exclusions for outstanding leasehold interest indemnity insurance are explained in the policy document. Property lawyers are obliged to direct the borrower to the outstanding leasehold interest indemnity insurance policy document. Outstanding Leasehold Interest indemnity insurance is devised to provide indemnity in respect of the risks specified in the policy schedule - so it is essential check any draft to ensure it is as it should be. The continuance of this non-investment insurance agreement is in perpetuity unless otherwise stated in the outstanding leasehold interest indemnity insurance policy. Adequacy in this regard should be checked.Outstanding Leasehold Interest indemnity insurance: Important aspects 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. Outstanding Leasehold Interest indemnity insurance Policies should be checked for the following- Diminution in value due to the successful enforcement of the risks specified in the outstanding leasehold interest policy.
- 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.
- 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 outstanding leasehold interest indemnity insurance, to the extent that such costs are rendered abortive by court order.
- Reimbursement for compensation incurred in any action concerning the risks specified in the outstanding leasehold interest indemnity insurance, including incurred costs and expenses.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
- Money paid with consent in writing from the insurance company to liberate the land from the risks specified in the outstanding leasehold interest indemnity insurance.
Always check what is not included in the outstanding leasehold interest policy e.g. does the policy cover any property that has been altered within the 12 months prior to the commencement of the policy? Does it cover legal costs?
Further considerations for outstanding leasehold interest indemnity insurance
Outstanding Leasehold Interest Indemnity insurance isn’t a solution to all of the relevant problems. Information provided 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 bank 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 outstanding leasehold interest 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.