Outstanding Rights of Common Indemnity Insurance Bank conveyancing requirements
Godiva Mortgages and Accord, like many banks, have their own requirements when it comes to outstanding rights of common indemnity insurance. The content herein aims to help conveyancing solicitors on the numerous bank conveyancing panel where the title to be charged includes outstanding rights of common. It is not a substitute for checking the CML handbook requirements for each lender, for example Santander, Natwest or Nationwide. The content 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?
Halifax and RBS in common with the majority of mortgage companies, instructions are such that where outstanding rights of common indemnity insurance is effected:
- your firm must approve the terms of the outstanding rights of common policy on behalf of the bank
- the outstanding rights of common indemnity insurance policy should always be for the benefit of the lender and, if possible, for the benefit of the borrower and any subsequent owner or mortgagee. Where the borrower will not be covered by the outstanding rights of common indemnity insurance policy, the mortgagor must be informed accordingly.
- the outstanding rights of common indemnity insurance policy should be effected without cost to the lender
- your practice is obliged to disclose to the insurer all relevant information which you have acquired
- the limit of indemnity must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
- you is duty bound to spell out to the mortgagor 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 should not incorporate terms that you know would invalidate or compromise the interests of the mortgage company
- your firm must send a copy of the outstanding rights of common indemnity insurance to the mortgagor 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 additional borrowing against the security of the property
| 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. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Chelsea Building Society | 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. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Hampden | The open market value of the property according to the valuation report. |
| 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. |
| Lloyds | The value of the property. |
| Lloyds | The value of the property. |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the advance. |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| Perenna | The higher of the purchase price or valuation. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| Secure Trust Bank | An amount at least equal to the market value. 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). |
| Royal Bank of Scotland | An amount equal to the value of the property. |
| RBS (One Account) | 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. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
Outstanding Rights of Common Contingency Insurance : Reflections
The extent of the terms for outstanding rights of common indemnity insurance are set out in the policy document. Conveyancing solicitors are obliged to point the borrower to the outstanding rights of common indemnity insurance policy itself. Outstanding Rights of Common indemnity insurance is devised to afford indemnity in respect of the risks specified in the policy schedule - so it’s important to check the schedule to ensure it is correct. The lifetime of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.Significant features and benefits of outstanding rights of common indemnity 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 Rights of Common indemnity insurance Policies are likely to cover the following- All sums paid with the written consent of the insurance company to liberate the land from the risks specified in the outstanding rights of common indemnity insurance.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
- 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 commenced, before the commencement of proceedings for the enforcement of the risks specified in the outstanding rights of common insurance, to the extent that such costs are rendered abortive by court order.
- Diminution in value resulting from the successful enforcement of the risks specified in the outstanding rights of common insurance.
- Reimbursement for compensation incurred in any action regarding the risks specified in the outstanding rights of common policy, as well as fees of a legal nature.
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 rights of common policy will be invalidated.
Further considerations for outstanding rights of common indemnity insurance
Outstanding Rights of Common 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 rights of common indemnity cover will not necessarily be the right solution. Content on this webpage is for general information for conveyancers and solicitors in England and Wales on the the lender approved 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 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.