Possessory Title Indemnity Insurance Lender conveyancing requirements
Coventry BS and Halifax, as with most banks, dictate their own specific instructions when it comes to possessory title indemnity insurance. This page sets out to enlighten property law practitioners on the various lender solicitors panel where the title for the the property to be mortgaged contains possessory title. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each lender, for example Virgin Money, Natwest or Yorkshire Bank Home Loans. 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?
Leeds Building Society and Barnsley BS in common with many lenders, requirements are that where possessory title indemnity insurance is to be taken out:
- the possessory title indemnity insurance policy must not contain terms that you know would invalidate or prejudice the interests of the mortgage company
- your practice must send a copy of the possessory title indemnity insurance to the mortgagor and explain to the borrower why the possessory title indemnity insurance policy was effected and that a further policy might be mandatory if there is supplemental borrowing against the security of the property
- your practice is obliged to disclose to the insurer all relevant information which you have gathered
- the level of indemnity must satisfy the requirements for the mortgage company (See Part II Handbook requirements )
- the possessory title indemnity insurance policy should be placed on risk at no charge to the lender
- your firm must approve the terms of the possessory title policy on behalf of the bank
- your firm is duty bound to spell out to the mortgagor that the borrower must adhere to any conditions of the possessory title indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the insurance
- the possessory title indemnity insurance policy should always be for the benefit of the mortgage company and, wherever possible, for the benefit of the borrower and any next owner or mortgagee. If the borrower will not be protected by the possessory title indemnity insurance policy, the mortgagor should be informed accordingly.
| Lender | Requirement |
|---|---|
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Coutts Finance | The open market value of the property according to the valuation report. |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| 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. |
| 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. |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| National Westminster Bank | An amount equal to the value of the property. |
| Reliance Bank | \xA31,000,000.00 |
| Rely Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
| Yorkshire 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. |
General Possessory Title indemnity insurance points to consider
The full terms, conditions and exclusions for possessory title indemnity insurance are set out in the policy paperwork. Conveyancing Practitioners are obliged to direct the borrower to the possessory title indemnity insurance policy paperwork. Possessory Title Contingency insurance is devised to provide indemnity in respect of the risks set out in the policy schedule - so you should check the document to ensure it is in order. The duration 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.Significant features and benefits of possessory title Contingency 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. Possessory Title indemnity insurance Policies should be checked for the following- Cover for compensation incurred in any action concerning the risks specified in the possessory title policy, including solicitors charges.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- 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 possessory title policy, to the extent that such costs are rendered abortive by court order.
- Money paid with the written consent of the insurance company to liberate the land from the risks specified in the possessory title 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.
- Diminution in value resulting from the successful enforcement of the risks specified in the possessory title policy.
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.
Possessory Title Indemnity Insurance has limitations - Other considerations
There may be consequences arising from the enforcement of the risks identified in the possessory title indemnity insurance which are not adequately covered by financial compensation. Information provided on this webpage is for general information for Regulated law firms 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 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 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 content set out above covers to properties in England and Wales.