Indemnity Insurance of Outstanding Rights of Common Bank conveyancing instructions
Yorkshire Bank Home Loans and Bank of Scotland, as with the majority of banks, have their own requirements when it comes to outstanding rights of common indemnity insurance. This page is designed to help property law firms on the different lender solicitors panel where the title to be charged incorporates outstanding rights of common. It is not a alternative for checking the CML handbook requirements for each lender, whether it be Godiva Mortgages, RBS or Yorkshire Building Society. The information on this page Is not to be read as outstanding rights of common indemnity insurance advice.
Need help with outstanding rights of common indemnity insurance from your lender?
Natwest and Lloyds TSB like the majority of mortgage companies, instructions are such that where outstanding rights of common indemnity insurance is to be taken out:
- the outstanding rights of common indemnity insurance policy must not contain conditions which you know would invalidate or compromise the interests of the mortgage company
- your practice must explain to the borrower that the borrower must adhere to any conditions of the outstanding rights of common indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in relation to the insurance
- the outstanding rights of common indemnity insurance policy must be effected at no cost to the lender
- you must disclose to the insurer all relevant information which you have obtained
- your firm must send a copy of the outstanding rights of common indemnity insurance to the borrower and explain to the mortgagor why the outstanding rights of common indemnity insurance policy was effected and that a further policy may be mandatory if there is supplemental lending against the mortgaged property
- the level of indemnity must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- your practice must approve the terms of the outstanding rights of common policy on behalf of the mortgage company
- the outstanding rights of common indemnity insurance policy needs to be in favor of the mortgage company and, if possible, for the benefit of the borrower and any future registered proprietor or mortgagee. If the borrower will not be protected by the outstanding rights of common indemnity insurance policy, the mortgagor should be advised accordingly.
| Lender | Requirement |
|---|---|
| Aldermore Bank | 110% of the purchase price or valuation, whichever is greater. 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). |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Ecology Building Society | An amount equal to at least 110% of the mortgage advance |
| GE Money | GE Money Home Lending has withdrawn from the UK mortgage market. |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| 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. |
| Hodge | 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. |
| Leeds Building Society | An amount at least equal to the amount of the mortgage advance plus 10%. Any indemnity insurance policy must protect the borrowers, any successor in title and any Mortgagee. |
| Lloyds TSB Scotland | The value of the property |
| Manchester Building Society | Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%. |
| Mortgage Express | Amount of loan + 15% |
| NRAM Ltd | 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. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Scottish Building Society | Amount of mortgage plus 25%. |
| St James Place | An amount at least equal to the total of the initial mortgage advance plus any pre-agreed reserve. These amounts will be shown in the mortgage offer. |
| Royal Bank of Scotland | An amount equal to the value of the property. |
| Topaz Finance | Valuation or purchase price, whichever is higher. The policy must always benefit the borrower and any subsequent owner or mortgagee - the policy must be index linked. |
| Ulster Bank | An amount equal to the value of the property. |
Non lender-specific considerations
The full terms, conditions and exclusions for outstanding rights of common indemnity insurance are set out in the policy paperwork. Conveyancing solicitors should direct the borrower to the outstanding rights of common indemnity insurance policy itself. The intention of outstanding rights of common indemnity insurance is to grant indemnity in respect of the risks set out in the policy schedule - so it’s important to check any draft to determine that it is as it should be. The continuance of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.Important characteristics and benefits of outstanding rights of common 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. Outstanding Rights of Common indemnity insurance Policies are likely to cover the following- Loss in market value due to the successful enforcement of the risks specified in the outstanding rights of common insurance.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- The cost of 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 outstanding rights of common policy, to the extent that such costs are rendered abortive by court order.
- Reimbursement for compensation incurred in any action in respect of the risks specified in the outstanding rights of common insurance, as well as fees of a legal nature.
- Money paid with the written consent of the insurance company to free the land from the risks specified in the outstanding rights of common insurance.
- The out of pocket expenses 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.
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 outstanding rights of common policy will be invalidated.
Other considerations for outstanding rights of common indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from outstanding rights of common insurance may be adequate for your client. Content on this webpage is for general information for conveyancers and solicitors in England and Wales on the the mortgage company approved 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 rights of common Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The above information covers to properties in England and Wales.