Indemnity Insurance of Possessory Title Mortgage Company conveyancing instructions
Halifax and Lloyds TSB, like many banks, have their own requirements when it comes to possessory title indemnity insurance. This page is designed to help property law lawyers on the numerous lender solicitors panel where the title for the the property to be mortgaged incorporates possessory title. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each lender, be it Bank of Scotland, Leeds Building Society or Chelsea BS. The content on this page Is not to be read as possessory title indemnity insurance advice.
Need help with possessory title indemnity insurance from your lender?
Yorkshire Bank Home Loans and Barclays like most mortgage companies, instructions are such that where possessory title indemnity insurance is to be taken out:
- your practice must supply a duplicate of the possessory title indemnity insurance to the borrower and explain to the mortgagor why the possessory title indemnity insurance policy was effected and that a further policy may be necessary if there is supplemental borrowing against the mortgaged property
- the possessory title indemnity insurance policy must be for the benefit of the bank 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 possessory title indemnity insurance policy, the mortgagor needs to be informed accordingly.
- your firm must spell out to the mortgagor that the borrower must comply with any conditions of the possessory title indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in respect of the policy
- the possessory title indemnity insurance policy should be effected at no expense to the lender
- you is obliged to reveal to the insurer all relevant information which you have gathered
- the limit of indemnity must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- your practice are responsible for approving the terms of the possessory title policy on behalf of the lender
- the possessory title indemnity insurance policy must not contain conditions that you know would void or prejudice the interests of the lender
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| 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). |
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Barnsley 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. |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Family Building Society | An amount at least equal to the mortgage advance. |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Holmesdale Building Society | 110% |
| Kensington Mortgage | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Legal & General Home Finance | The policy should be for the full market value of the property and indexed linked. The policy must be for our benefit, and for the benefit of the borrower where available. The policy must benefit all successors and assigns. |
| Masthaven Bank | An amount at least equal to the total mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| New Street Mortgages | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Platform | 110% of principal sum. |
| Saffron Building Society | Higher of purchase price or valuation. 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). |
| Scottish Building Society | Amount of mortgage plus 25%. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
Possessory Title Contingency Insurance : Reflections
The full terms, conditions and exclusions for possessory title indemnity insurance are set out in the policy paperwork. Conveyancing solicitors are obliged to direct your non-lender client to the possessory title indemnity insurance policy document. The intention of possessory title indemnity insurance is to grant indemnity in respect of the risks specified in the policy schedule - so you should check the document to ensure it is in order. The lifetime of this non-investment insurance contract is in perpetuity unless otherwise stated in the possessory title indemnity insurance policy. Again, please check that this is as you expected.Possessory Title Contingency insurance: Significant characteristics and benefits:
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. Possessory Title indemnity insurance Cover normally includes- Market value reduction resulting from the successful enforcement of the risks specified in the possessory title policy.
- Liability for damages or compensation incurred in any proceedings concerning the risks specified in the possessory title insurance, including fees of a legal nature.
- The cost of altering or taking down 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 sums paid with the written consent of the insurance company to free the property from the risks specified in the possessory title indemnity insurance.
- The cost of works (including professional fees) for the purpose of the development commenced, prior to proceedings for the enforcement of the risks specified in the possessory title insurance, to the extent that such costs are rendered abortive by court order.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
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 possessory title policy will not be valid.
Further considerations for possessory title indemnity insurance
Possessory Title insurance may satisfy lenders such as RBS or Nationwide 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. Information contained within 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 possessory title 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 is in relation to properties in England and Wales.