Possessory Title Indemnity Insurance Lender conveyancing requirements
Santander and Halifax, like most banks, set their own requirements when it comes to possessory title indemnity insurance. The purpose of this page to assist conveyancing firms on the various lender conveyancing panel where the title for the the property to be mortgaged contains possessory title. It is not a alternative for checking the CML handbook requirements for each lender, be it Leeds Building Society, Coventry BS or RBS. 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?
Bank of Scotland and Yorkshire Bank Home Loans like the majority of mortgage companies, obligations require that where possessory title indemnity insurance is to be put on risk:
- your practice is duty bound to explain to the mortgagor that the borrower must adhere to any conditions of the possessory title indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in relation to the insurance
- the possessory title indemnity insurance policy must not contain terms that you recognise would void or prejudice the interests of the mortgage company
- your practice is obliged to disclose to the insurer all relevant information which you have obtained
- your practice are responsible for approving the terms of the possessory title policy on behalf of the lender
- the possessory title indemnity insurance policy should be placed on risk without cost to the mortgage company
- the level of indemnity must meet the requirements for the bank (See Part II Handbook requirements )
- your practice must provide a duplicate of the possessory title indemnity insurance to the mortgagor and explain to the mortgagor why the possessory title indemnity insurance policy was effected and that a further policy could be necessary if there is further borrowing against the security of the property
- the possessory title indemnity insurance policy must be for the benefit of the bank and, wherever possible, in favour of the borrower and any subsequent registered proprietor or mortgage company. Where the mortgagor will not be covered by the possessory title indemnity insurance policy, the mortgagor needs to be informed accordingly.
| Lender | Requirement |
|---|---|
| Accord Buy to Let | 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. |
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| Barclays plc | Higher of purchase price or valuation |
| Britannia | Cover to the full value of the property. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| 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 |
| GE Money | GE Money Home Lending has withdrawn from the UK mortgage market. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| 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. |
| Manchester Building Society | Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%. |
| Molo Finance Buy to Let | 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 mortgages. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Rely Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
| 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. |
| 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. Property lawyers should direct the borrower to the possessory title indemnity insurance policy paperwork. 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 schedule to ensure 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. Again, please check that this is as you expected.Important aspects and benefits of possessory title Contingency insurance :
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- All sums paid with consent in writing from the insurance company to liberate the land from the risks specified in the possessory title 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.
- Loss in market value due to the successful enforcement of the risks specified in the possessory title policy.
- Reimbursement for compensation incurred in any proceedings in respect of the risks specified in the possessory title insurance, as well as solicitors charges.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Expenses for 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 decision.
Due diligence should extend to checking that the answers on the application form are accurate. However remote the likelihood of a claim on the lender insurance policy might be you can be sure that the insurer will check the details on any proposal form thoroughly before any claim is paid out.
Further 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 provided on this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company 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 content set out above covers to properties in England and Wales.