Possessory Title Indemnity Insurance Lender conveyancing requirements
Yorkshire Bank Home Loans and Nationwide, like the majority of mortgage companies, dictate their own requirements when it comes to possessory title indemnity insurance. The content herein aims to help property law practitioners on the different bank solicitors panel where the title for the the property to be mortgaged includes possessory title. Solicitors should still check the CML handbook requirements for each mortgage company, for example Yorkshire Building Society, Leeds Building Society or Bank of Scotland. The content on this page is not focused on possessory title indemnity insurance requirements.
Need help with possessory title indemnity insurance from your lender?
Chelsea BS and Halifax as with the majority of lenders, requirements are that where possessory title indemnity insurance is to be taken out:
- you is duty bound to spell 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 relation to the insurance
- your firm is obliged to reveal to the insurer all relevant information which you have obtained
- the possessory title indemnity insurance policy should not contain conditions that you are aware would void or compromise the interests of the mortgage company
- the minimum level of cover for the policy must satisfy the requirements for the bank (See Part II Handbook requirements )
- your firm are responsible for approving the terms of the possessory title policy on behalf of the bank
- the possessory title indemnity insurance policy should always be for the benefit of the lender and, if possible, in favour of the borrower and any future registered proprietor or bank. If the borrower will not be covered by the possessory title indemnity insurance policy, you must advise the mortgagor of this fact.
- the possessory title indemnity insurance policy should be effected without cost to the bank
- you must supply 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 may be required if there is further lending against the security of the property
| Lender | Requirement |
|---|---|
| April Mortgages | An amount at least equal to the mortgage advance. |
| Aviva Equity Release | Full value of the property. |
| Barclays plc | Higher of purchase price or valuation |
| Coutts & Co | The open market value of the property according to the valuation report. |
| Coutts Finance | The open market value of the property according to the valuation report. |
| Coventry Building Society | Minimum of the value of the property. |
| Family Building Society | An amount at least equal to the mortgage advance. |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| Legal & General Home Finance | The policy should be for the full market value of the property and indexed linked. The policy must be for our benefit, and for the benefit of the borrower where available. The policy must benefit all successors and assigns. |
| LendInvest | An amount at least equal to the valuation of the property. |
| Metro Bank | The open market value of the property according to the valuation report. |
| Mortgage Express (No 2) | [This lender has not published an answer to this question. Please contact the lender.]
|
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| The Mortgage Works | The full purchase price/value of the property whichever is higher |
| RBS (One Account) | An amount equal to the value of the property. |
| Whistletree | The value of the property |
Possessory Title Contingency Insurance : Reflections
The extent of the terms for possessory title indemnity insurance are set out in the policy document. Conveyancing solicitors are obliged to direct the borrower to the possessory title indemnity insurance policy document. 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 ensure it is in order. The duration 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 Contingency insurance: Significant 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- 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.
- Liability for damages or compensation incurred in any proceedings regarding the risks specified in the possessory title indemnity insurance, including legal and associated costs.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- The cost of works (including architects’ and surveyors’ 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 order.
- Loss in market value due to the successful enforcement of the risks specified in the possessory title policy.
- All sums paid with consent in writing from the insurance company to free the land from the risks specified in the possessory title insurance.
You also need to be sure that the answers on the application form are correct. Regardless of how remote a claim on the mortgage company 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 met.
Possessory Title Indemnity Insurance has limitations - Further considerations
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. Content on this webpage is for general information for Regulated law firms 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 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.