Mortgage Company conveyancing panel requirements re Possessory Title Indemnity Insurance
Barnsley BS and Coventry BS, like many banks, have their own requirements when it comes to possessory title indemnity insurance. This page is designed to help property law solicitors on the different lender solicitors panel where the title for the the property to be mortgaged contains possessory title. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each lender, for example Skipton, Leeds Building Society or Halifax. 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?
Virgin Money and Barclays as with the majority of lenders, instructions are such that where possessory title indemnity insurance is to be put on risk:
- the possessory title indemnity insurance policy should not contain terms that you know would void or prejudice the interests of the bank
- your practice must point out to the borrower that the borrower is obliged to adhere to 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 respect of the insurance
- the possessory title indemnity insurance policy must be for the benefit of the mortgage company and, if possible, for the benefit of the mortgagor and any subsequent registered proprietor or lender. Where the borrower will not be protected by the possessory title indemnity insurance policy, you must advise the mortgagor of this fact.
- you must provide 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 might be required if there is supplemental lending against the mortgaged property
- your firm is required to reveal to the insurer all relevant information which you have obtained
- the possessory title indemnity insurance policy must be placed on risk without charge to the mortgage company
- your practice are responsible for approving the terms of the possessory title policy on behalf of the lender
- the minimum level of cover for the policy must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
| 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. |
| Adam & Company | The open market value of the property according to the valuation report. |
| 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. |
| April Mortgages | An amount at least equal to the mortgage advance. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| 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. |
| Bradford & Bingley | Amount of loan + 15% |
| 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. |
| Family Building Society | An amount at least equal to the mortgage advance. |
| Halifax | An amount at least equal to the mortgage advance. |
| Investec | The open market value of the property according to the valuation report. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| NRAM Ltd | 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. |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Perenna | The higher of the purchase price or valuation. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Scottish Widows | The value of the property. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
Non lender-specific considerations
The full terms, conditions and exclusions for possessory title indemnity insurance are identified in the policy paperwork. Conveyancing Practitioners should point the borrower to the possessory title indemnity insurance policy itself. 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 duration of this non-investment insurance contract is in perpetuity unless otherwise stated in the possessory title indemnity insurance policy. It is well worth checking that the time frame is correct.Possessory Title Contingency 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 Policies are likely to cover the following- The cost of altering or destroying 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 ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Market value reduction resulting from the successful enforcement of the risks specified in the possessory title policy.
- Cover for compensation incurred in any action regarding the risks specified in the possessory title insurance, including solicitors charges.
- All sums paid with the written consent of the insurance company to liberate the land from the risks specified in the possessory title policy.
- Expenses for works (including professional fees) for the purpose of the development commenced, before the commencement of proceedings for the enforcement of the risks specified in the possessory title policy, to the extent that such costs are rendered abortive by court decision.
Don't forget to consider what is not included in the possessory title indemnity insurance e.g. does the policy cover any residence that has been altered within the 12 months prior to the commencement of the policy? Does it cover legal costs?
Possessory Title Indemnity Insurance has limitations - Supplemental considerations
Possessory Title Indemnity insurance isn’t a solution to all of the relevant problems. Information contained within this webpage is for general information for conveyancers and solicitors in England and Wales on the the bank conveyancing 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.