Possessory Title Indemnity Insurance Lender conveyancing requirements
Nationwide and Lloyds TSB, as with many lenders, set their own specific instructions when it comes to possessory title indemnity insurance. This page sets out to enlighten domestic conveyancing solicitors on the different bank approved list of panel lawyers where the title for the the property to be mortgaged includes possessory title. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each lender, be it Skipton, Coventry BS or RBS. The information on this page is not focused on possessory title indemnity insurance requirements.
Need help with possessory title indemnity insurance from your lender?
Santander and Accord as with many lenders, requirements are that where possessory title indemnity insurance is effected:
- the possessory title indemnity insurance policy should not contain terms that you recognise would void or compromise the interests of the mortgage company
- the level of indemnity must satisfy the requirements for the mortgage company (See Part II Handbook requirements )
- you is duty bound to point out to the mortgagor that the borrower will need to comply with any conditions of the possessory title indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in relation to the insurance
- the possessory title indemnity insurance policy needs to be in favor of the mortgage company and, if possible, for the benefit of the mortgagor and any next owner or bank. Where the mortgagor will not be protected by the possessory title indemnity insurance policy, the borrower should be informed accordingly.
- your practice must provide a copy of the possessory title indemnity insurance to the borrower and explain to the borrower why the possessory title indemnity insurance policy was effected and that additional insurance may be necessary if there is further borrowing against the security of the property
- the possessory title indemnity insurance policy must be effected without charge to the mortgage company
- your firm is required to disclose to the insurer all relevant information which you have gathered
- your firm must approve the terms of the possessory title policy on behalf of the mortgage company
| Lender | Requirement |
|---|---|
| Accord Mortgages | 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. |
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| Britannia | Cover to the full value of the property. |
| Coutts Finance | The open market value of the property according to the valuation report. |
| Holmesdale Building Society | 110% |
| Kensington Mortgage | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Lloyds TSB Scotland | The value of the property |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| Pepper Money | An amount equal to at least 110% of 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 and also the borrower(s). |
| Reliance Bank | \xA31,000,000.00 |
| 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). |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| RBS - Direct Line | An amount equal to the value of the property. |
| RBS- First Active | 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 possessory title indemnity insurance are set out in the policy document. Conveyancing solicitors should point the borrower to the possessory title indemnity insurance policy paperwork. The intention of possessory title indemnity insurance is to afford indemnity in respect of the risks set out in the policy schedule - so you should check the document to determine that it is as it should be. The lifetime of this non-investment insurance contract is in perpetuity unless otherwise stated in the possessory title indemnity insurance policy. Adequacy in this regard should be checked.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- Reimbursement for compensation incurred in any proceedings in respect of 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
- Loss in market value due to the successful enforcement of the risks specified in the possessory title insurance.
- Expenses for works (including architects’ and surveyors’ 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 insurance, to the extent that such costs are rendered abortive by court decision.
- Money paid with consent in writing from the insurance company to liberate the property from the risks specified in the possessory title insurance.
- The out of pocket expenses 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.
Always check what is excluded from the possessory title indemnity insurance e.g. does the policy cover any residence that has been altered within the year prior to the commencement of the policy? Are legal costs covered?
Possessory Title Indemnity Insurance has limitations - Other considerations
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from possessory title insurance may be adequate for your client. Information provided on this webpage is for general information for Regulated law firms in England and Wales on the the lender 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.