Mortgage Company conveyancing panel conditions re Possessory Title Indemnity Insurance
Santander and Virgin Money, like the majority of mortgage companies, set their own specific instructions when it comes to possessory title indemnity insurance. The content herein aims to help property law firms on the different mortgage company solicitors panel where the title to be charged contains possessory title. Lawyers are advised to familiarise themselves with the CML handbook requirements for each bank, for example Godiva Mortgages, Leeds Building Society or Coventry 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?
Birmingham Midshires and Yorkshire Building Society like many lenders, obligations require that where possessory title indemnity insurance is to be put on risk:
- the minimum level of cover for the policy must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
- you must point 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 bank of any notice or potential claim in relation to the policy
- you must supply a copy 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 additional insurance might be required if there is further borrowing against the mortgaged property
- the possessory title indemnity insurance policy should not contain terms that you are aware would invalidate or compromise the interests of the bank
- the possessory title indemnity insurance policy should always be in favor of the lender and, wherever possible, for the benefit of the borrower and any future registered proprietor or mortgage company. Where the borrower will not be protected by the possessory title indemnity insurance policy, the borrower needs to be informed accordingly.
- your practice must approve the terms of the possessory title policy on behalf of the lender
- the possessory title indemnity insurance policy must be placed on risk without expense to the bank
- your practice must reveal to the insurer all relevant information which you have acquired
| Lender | Requirement |
|---|---|
| Bank of Scotland Private | [This lender has not published an answer to this question. Please contact the lender.]
|
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Britannia | Cover to the full value of the property. |
| 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. |
| Coutts & Co | The open market value of the property according to the valuation report. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Holmesdale Building Society | 110% |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| Metro Bank | The open market value of the property according to the valuation report. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| 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 |
| Rely Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| St James Place | An amount at least equal to the total of the initial mortgage advance plus any pre-agreed reserve. These amounts will be shown in the mortgage offer. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| TSB | The value of the property |
| 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 Bank | Open market value of property. |
Non lender-specific considerations
The full terms, conditions and exclusions for possessory title indemnity insurance are explained in the policy paperwork. Conveyancing solicitors should point 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 determine that it is correct. The lifetime of this non-investment insurance agreement is in perpetuity unless otherwise stated in the possessory title indemnity insurance policy. It is well worth checking that the time frame is correct.Important features and benefits of possessory title Contingency insurance :
The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the possessory title indemnity insurance schedule. Possessory Title indemnity insurance Policies are likely to cover the following- 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 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.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- Market value reduction due to the successful enforcement of 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, including solicitors charges.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, 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.
Due diligence should extend to checking that the answers on the application form are accurate. Regardless of how remote a claim on the mortgage company insurance policy might be you can be sure that the insurer will check the details on any proposal form thoroughly prior to any claim being admitted.
Possessory Title Indemnity Insurance has limitations - Supplemental 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 conveyancers and solicitors in England and Wales on the the lender solicitor 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 is in relation to properties in England and Wales.