Rights to Light Indemnity Insurance Mortgage Company conveyancing requirements
Accord and Barclays, as with most mortgage companies, set their own requirements when it comes to rights to light indemnity insurance. This page sets out to enlighten property law firms on the different lender approved list of panel lawyers where the title for the the property to be mortgaged incorporates rights to light. Solicitors should still check the CML handbook requirements for each mortgage company, for example Yorkshire Bank Home Loans, Bank of Scotland or Natwest. The content on this page is not focused on rights to light indemnity insurance requirements.
Need help with rights to light indemnity insurance from your lender?
Nationwide and RBS as with the majority of mortgage companies, obligations require that where rights to light indemnity insurance is effected:
- your firm is obliged to disclose to the insurer all relevant information which you have gathered
- your practice is duty bound to explain to the borrower that the borrower will need to comply with any conditions of the rights to light indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in respect of the policy
- the level of indemnity must meet the requirements for the bank (See Part II Handbook requirements )
- the rights to light indemnity insurance policy must be in favor of the lender and, wherever possible, in favour of the mortgagor and any subsequent owner or mortgagee. If the mortgagor will not be covered by the rights to light indemnity insurance policy, the mortgagor should be informed accordingly.
- the rights to light indemnity insurance policy should not incorporate conditions which you are aware would invalidate or compromise the interests of the lender
- your practice must supply a copy of the rights to light indemnity insurance to the borrower and explain to the borrower why the rights to light indemnity insurance policy was effected and that a further policy could be required if there is additional lending against the mortgaged property
- you are responsible for approving the terms of the rights to light policy on behalf of the bank
- the rights to light indemnity insurance policy must be effected without expense to the mortgage company
| Lender | Requirement |
|---|---|
| Adam & Company International | The open market value of the property according to the valuation report. |
| Bank of Scotland Private | [This lender has not published an answer to this question. Please contact the lender.]
|
| Britannia | Cover to the full value of the property. |
| Clydesdale Bank | Open market value of property. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Ecology Building Society | An amount equal to at least 110% of the mortgage advance |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Habito | Higher of purchase price or valuation |
| Halifax | An amount at least equal to the mortgage advance. |
| Lloyds | The value of the property. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Mortgage Express | Amount of loan + 15% |
| Nedbank | You are to refer to us for specific instructions on any matter involving indemnity insurance. |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Precise 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). |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| St James Place | An amount at least equal to the total of the initial mortgage advance plus any pre-agreed reserve. These amounts will be shown in the mortgage offer. |
| Whistletree | The value of the property |
General Rights to Light indemnity insurance points to consider
The extent of the terms for rights to light indemnity insurance are shown in the policy paperwork. Conveyancing solicitors are obliged to direct the borrower to the rights to light indemnity insurance policy paperwork. Rights to Light indemnity insurance is designed to grant indemnity in respect of the risks set out in the policy schedule - so you should check any draft to determine that it is as it should be. The continuance of this non-investment insurance agreement is in perpetuity unless otherwise stated in the rights to light indemnity insurance policy. It is well worth checking that the time frame is correct.Significant features and benefits of rights to light Contingency insurance :
The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the rights to light indemnity insurance schedule. Rights to Light indemnity insurance Cover normally includes- Market value reduction due to the successful enforcement of the risks specified in the rights to light policy.
- All sums paid with consent in writing from the insurance company to free the land from the risks specified in the rights to light insurance.
- The out of pocket expenses 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 rights to light insurance, as well as solicitors charges.
- The cost of works (including professional fees) for the purpose of the development commenced, prior to proceedings for the enforcement of the risks specified in the rights to light insurance, to the extent that such costs are rendered abortive by court decision.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
As with any insurance policy, 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 not be valid.
Rights to Light Indemnity Insurance has limitations - Further considerations
Rights to Light insurance may satisfy lenders such as Yorkshire Building Society or Halifax and prevent clients from from suffering financially but it cannot compensate for the stress and inconvenience the emotional suffering - after all the value of a home cannot always be measured in cash in the eyes of the owner. Information provided on this webpage is for general information for Regulated law firms in England and Wales on the the bank approved 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 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 above information covers to properties in England and Wales.