Mortgage Company conveyancing panel conditions re Possessory Title Indemnity Insurance
Bank of Scotland and RBS, as with the majority of banks, set their own requirements when it comes to possessory title indemnity insurance. The purpose of this page to assist property law practitioners on the different mortgage company approved list of panel lawyers where the title to be charged incorporates possessory title. It is not a substitute for checking the CML handbook requirements for each lender, for example Virgin Money, Yorkshire Bank Home Loans or Barnsley BS. The information on this page Is not to be read as possessory title indemnity insurance advice.
Need help with possessory title indemnity insurance from your lender?
Santander and Yorkshire Building Society as with many lenders, instructions are such that where possessory title indemnity insurance is to be taken out:
- your firm must provide 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 additional insurance could be necessary if there is further borrowing against the security of the property
- your practice must approve the terms of the possessory title policy on behalf of the mortgage company
- your practice must disclose to the insurer all relevant information which you have acquired
- the possessory title indemnity insurance policy must be in favor of the bank and, wherever possible, for the benefit of the mortgagor and any subsequent registered proprietor or mortgage company. If the mortgagor will not be covered by the possessory title indemnity insurance policy, the mortgagor needs to be advised accordingly.
- your practice is duty bound to spell out to the mortgagor that the borrower is obliged to adhere to any conditions of the possessory title indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in relation to the insurance
- the possessory title indemnity insurance policy should be placed on risk without charge to the mortgage company
- the limit of indemnity must satisfy the requirements for the lender (See Part II Handbook requirements )
- the possessory title indemnity insurance policy should not contain conditions which you are aware would void or compromise the interests of the mortgage company
| Lender | Requirement |
|---|---|
| Adam & Company International | The open market value of the property according to the valuation report. |
| April Mortgages | An amount at least equal to the mortgage advance. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Ecology Building Society | An amount equal to at least 110% of the mortgage advance |
| Family Building Society | An amount at least equal to the mortgage advance. |
| 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 | 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. |
| Hodge Equity Release | 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. |
| Holmesdale Building Society | 110% |
| Investec | The open market value of the property according to the valuation report. |
| Kensington Mortgage | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| LendInvest | An amount at least equal to the valuation of the property. |
| Lloyds | The value of the property. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| Whistletree | The value of the property |
Possessory Title Contingency Insurance : Reflections
The extent of the terms for possessory title indemnity insurance are identified in the policy document. Conveyancing Practitioners should direct the borrower to the possessory title indemnity insurance policy itself. The intention of possessory title indemnity insurance is to grant indemnity in respect of the risks set out in the policy schedule - so you should check any draft to determine that it is as it should be. The lifetime 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.Possessory Title Contingency insurance: Significant characteristics 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. Possessory Title indemnity insurance Policies should be checked for the following- 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.
- Loss in market value resulting from the successful enforcement of the risks specified in the possessory title policy.
- The cost of works (including professional fees) for the purpose of the development begun, or contracted for, before the commencement of proceedings for the enforcement of the risks specified in the possessory title indemnity insurance, to the extent that such costs are rendered abortive by court decision.
- Money paid with the written consent of the insurance company to liberate the property from the risks specified in the possessory title policy.
- Cover for compensation incurred in any action in respect of the risks specified in the possessory title insurance, as well as fees of a legal nature.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
Due diligence should extend to checking that the answers on the application form are accurate. Regardless of how remote a claim on the bank insurance policy might be you can certain that the insurer will check the details on any proposal form very carefully before any claim is admitted.
Supplemental considerations for possessory title indemnity insurance
Possessory Title 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 possessory title indemnity cover will not necessarily be the right solution. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the bank 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 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 covers to properties in England and Wales.