Bank conveyancing panel requirements re Rights to Light Indemnity Insurance
Chelsea BS and Accord, like many banks, dictate their own requirements when it comes to rights to light indemnity insurance. The purpose of this page to assist domestic conveyancing firms on the various mortgage company approved list of panel lawyers where the title to be charged contains rights to light. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each mortgage company, be it Virgin Money, Bank of Scotland or Lloyds TSB. The content on this page Is not to be read as rights to light indemnity insurance advice.
Need help with rights to light indemnity insurance from your lender?
Leeds Building Society and Skipton like the majority of mortgage companies, instructions are such that where rights to light indemnity insurance is effected:
- the minimum level of cover for the policy must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
- you is duty bound to explain to the borrower that the borrower must comply with any conditions of the rights to light indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in relation to the policy
- you must provide a copy of the rights to light indemnity insurance to the mortgagor and explain to the borrower why the rights to light indemnity insurance policy was effected and that a further policy might be required if there is further lending against the mortgaged property
- the rights to light indemnity insurance policy should always be for the benefit of the lender and, if possible, in favour of the mortgagor and any future registered proprietor or mortgage company. If the borrower will not be protected by the rights to light indemnity insurance policy, you must advise the borrower of this fact.
- your practice must approve the terms of the rights to light policy on behalf of the lender
- the rights to light indemnity insurance policy must be effected at no expense to the mortgage company
- the rights to light indemnity insurance policy must not incorporate conditions that you know would void or prejudice the interests of the lender
- your practice must reveal to the insurer all relevant information which you have acquired
| Lender | Requirement |
|---|---|
| Allied Irish Bank | At least the amount of the mortgage advance. |
| Atom Bank | At least the open market value of the property according to the valuation report. |
| Aviva Equity Release | Full value of the property. |
| Barnsley 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. |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Coutts Finance | The open market value of the property according to the valuation report. |
| Coventry Building Society | Minimum of the value of the property. |
| 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. |
| Kensington Mortgage | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| Landmark | 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. |
| LendInvest | An amount at least equal to the valuation of the property. |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| Metro Bank | 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 |
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| The Mortgage Business | An amount at least equal to the mortgage advance/credit limit - whichever is the highest. |
Rights to Light Contingency Insurance : Reflections
The full terms, conditions and exclusions for rights to light indemnity insurance are identified in the policy paperwork. Conveyancing Practitioners are obliged to point the borrower to the rights to light indemnity insurance policy paperwork. The intention of rights to light indemnity insurance is to grant indemnity in respect of the risks specified in the policy schedule - so it’s important to check the schedule to ensure it is as it should be. The continuance of this non-investment insurance contract is in perpetuity unless otherwise stated in the rights to light indemnity insurance policy. Adequacy in this regard should be checked.Significant aspects and benefits of rights to light Contingency insurance :
Protection via such a policy is to cover the risk of third parties looking to enforce rights that can affect the use of a property. Rights to Light indemnity insurance Policies should be checked for the following- Liability for damages or compensation incurred in any proceedings in respect of the risks specified in the rights to light insurance, as well as legal and associated costs.
- All sums paid with consent in writing from the insurance company to liberate the land from the risks specified in the rights to light insurance.
- Diminution in value due to the successful enforcement of the risks specified in the rights to light insurance.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- The cost 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.
- Expenses for works (including professional fees) for the purpose of the development started, before the commencement of proceedings for the enforcement of the risks specified in the rights to light indemnity insurance, to the extent that such costs are rendered abortive by court order.
As is the case with all conventional insurance, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the rights to light policy will be invalidated.
Rights to Light Indemnity Insurance has limitations - Additional considerations
There may be consequences arising from the enforcement of the risks identified in the rights to light policy which are not adequately covered by financial compensation. Information contained within 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 rights to light 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.