Lender conveyancing panel requirements re Outstanding Leasehold Interest Indemnity Insurance
Bank of Scotland and Santander, in common with the majority of lenders, have their own requirements when it comes to outstanding leasehold interest indemnity insurance. The purpose of this page to assist domestic conveyancing lawyers on the different bank approved list of panel lawyers where the title for the the property to be mortgaged contains outstanding leasehold interest. It is not a alternative for checking the CML handbook requirements for each bank, whether it be Skipton, Birmingham Midshires or Leeds Building Society. The content 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?
Virgin Money and Chelsea BS in common with many banks, obligations require that where outstanding leasehold interest indemnity insurance is to be put on risk:
- your firm must approve the terms of the outstanding leasehold interest policy on behalf of the mortgage company
- you must point out to the mortgagor that the borrower is obliged to adhere to any conditions of the outstanding leasehold interest indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in relation to the policy
- the outstanding leasehold interest indemnity insurance policy needs to be in favor of the lender and, if possible, for the benefit of the borrower and any next registered proprietor or mortgagee. Where the mortgagor will not be covered by the outstanding leasehold interest indemnity insurance policy, the mortgagor should be advised accordingly.
- the outstanding leasehold interest indemnity insurance policy must be effected at no charge to the lender
- your practice must provide a copy of the outstanding leasehold interest indemnity insurance to the borrower and explain to the mortgagor why the outstanding leasehold interest indemnity insurance policy was effected and that additional insurance could be required if there is further borrowing against the mortgaged property
- the outstanding leasehold interest indemnity insurance policy should not incorporate conditions that you are aware would invalidate or prejudice the interests of the bank
- the limit of indemnity must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- your firm must reveal to the insurer all relevant information which you have acquired
| Lender | Requirement |
|---|---|
| Adam & Company International | The open market value of the property according to the valuation report. |
| Aviva Equity Release | Full value of the property. |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Britannia | Cover to the full value of the property. |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Harpenden Building Society | 110% of mortgage advance |
| Hinckley and Rugby | The policy must be for our benefit and for no less than the amount lent to the borrower, including retentions, stage payments and interest. |
| Investec | The open market value of the property according to the valuation report. |
| Kent Reliance | An amount at least equal to 110% of the mortgage valuation. |
| Landmark | Preference for full market value of the property, but if this level of cover is not available, will accept a minimum of the actual loan amount. You must approve the policy on our behalf. |
| LendInvest | An amount at least equal to the valuation of the property. |
| Metro Bank | The open market value of the property according to the valuation report. |
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| New Street Mortgages | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Perenna | The higher of the purchase price or valuation. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| RBS (One Account) | An amount equal to the value of the property. |
Non lender-specific considerations
The full terms, conditions and exclusions for outstanding leasehold interest indemnity insurance are set out in the policy paperwork. Conveyancing Practitioners should direct the borrower to the outstanding leasehold interest indemnity insurance policy document. The intention of outstanding leasehold interest indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so you should check the schedule to ensure it is in order. The duration of this non-investment insurance contract is in perpetuity unless otherwise stated in the outstanding leasehold interest indemnity insurance policy. Adequacy in this regard should be checked.Outstanding Leasehold Interest Contingency insurance: Significant features 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 are likely to cover the following- All sums paid with consent in writing from the insurance company to liberate the property from the risks specified in the outstanding leasehold interest 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.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- Cover for compensation incurred in any proceedings concerning the risks specified in the outstanding leasehold interest policy, including incurred costs and expenses.
- Loss in market value resulting from the successful enforcement of the risks specified in the outstanding leasehold interest indemnity insurance.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development started, before the commencement of 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 decision.
As with any insurance policy, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the outstanding leasehold interest policy will not be valid.
Additional considerations for outstanding leasehold interest indemnity insurance
Outstanding Leasehold Interest 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 outstanding leasehold interest indemnity cover will not necessarily be the right solution. Information provided 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 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.