Indemnity Insurance of Possessory Title Mortgage Company conveyancing requirements
Yorkshire Bank Home Loans and Accord, as with most mortgage companies, set their own requirements when it comes to possessory title indemnity insurance. The content herein aims to help conveyancing solicitors on the numerous lender conveyancing panel where the title to be charged includes possessory title. Lawyers are advised to familiarise themselves with the CML handbook requirements for each lender, for example Coventry BS, RBS or Leeds Building Society. The content on this page is not focused on possessory title indemnity insurance requirements.
Need help with possessory title indemnity insurance from your lender?
Skipton and Santander in common with many lenders, requirements are that where possessory title indemnity insurance is to be taken out:
- your firm 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 borrower should notify the mortgage company of any notice or potential claim in respect of the insurance
- your firm must reveal to the insurer all relevant information which you have obtained
- the possessory title indemnity insurance policy should be placed on risk at no expense to the mortgage company
- you are responsible for approving the terms of the possessory title policy on behalf of the bank
- 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 mandatory if there is further borrowing against the mortgaged property
- the limit of indemnity must meet the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- the possessory title indemnity insurance policy needs to be for the benefit of the mortgage company and, wherever possible, in favour of the borrower and any future owner or lender. Where the borrower will not be covered by the possessory title indemnity insurance policy, the borrower must be informed accordingly.
- the possessory title indemnity insurance policy should not incorporate conditions that you are aware would void or compromise the interests of the mortgage company
| Lender | Requirement |
|---|---|
| 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). Where a property is being sold at undervalue and an equity gift is being provided, the conveyancer must ensure the seller obtains an Insolvency Act Indemnity Insurance Policy and provides evidence to you, so that you are comfortable an appropriate policy is in place to Aldermore’s satisfaction. This indemnity insurance aims to cover Aldermore against any future claims by creditors of the seller that may challenge the sale. |
| Bluestone Mortgages | 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. |
| Clydesdale Bank | Open market value of property. |
| Coutts Finance | The open market value of the property according to the valuation report. |
| Family Building Society | An amount at least equal to the mortgage advance. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Hampden | The open market value of the property according to the valuation report. |
| JPMorgan | 110% of principal sum. |
| Lloyds Bank Private Banking | Not less than the Facility plus 10%. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| Nedbank | You are to refer to us for specific instructions on any matter involving indemnity insurance. |
| Rely Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| 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). |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| Royal Bank of Scotland -Natwest One | 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. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
| Whistletree | The value of the property |
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 solicitors are obliged to direct the borrower to the possessory title indemnity insurance policy itself. The intention of possessory title indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so it’s important to check the schedule 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. Again, please check that this is as you expected.Possessory Title indemnity insurance: Important aspects 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 Cover normally includes- Market value reduction resulting from the successful enforcement of the risks specified in the possessory title indemnity insurance.
- Money paid with consent in writing from the insurance company to free the property from the risks specified in the possessory title indemnity insurance.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- 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.
- Cover for compensation incurred in any proceedings in respect of the risks specified in the possessory title policy, as well as solicitors charges.
- 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 indemnity insurance, 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 correct. However remote the likelihood of a claim on the lender insurance policy might be you can certain that the insurer will check the details on any proposal form very carefully prior to any claim being paid out.
Additional considerations for possessory title indemnity insurance
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 mortgage company solicitor panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the mortgage company 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.