Rights to Light Indemnity Insurance Bank conveyancing requirements
Virgin Money and Natwest, as with the majority of lenders, dictate their own specific instructions when it comes to rights to light indemnity insurance. The purpose of this page to assist property law practitioners on the different mortgage company approved list of panel lawyers where the title to be charged contains rights to light. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each lender, be it Chelsea BS, Lloyds TSB or Nationwide. 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?
Accord and Coventry BS in common with most banks, requirements are that where rights to light indemnity insurance is to be taken out:
- your practice is required to disclose to the insurer all relevant information which you have acquired
- your firm must send a duplicate 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 additional insurance could be required if there is further lending against the security of the property
- you must approve the terms of the rights to light policy on behalf of the bank
- your firm is duty bound to point out to the mortgagor that the borrower must adhere to any conditions of the rights to light indemnity insurance policy and that the mortgagor should notify the lender of any notice or potential claim in respect of the policy
- the level of indemnity must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- the rights to light indemnity insurance policy must be placed on risk at no charge to the bank
- the rights to light indemnity insurance policy should always be for the benefit of the bank and, wherever possible, for the benefit of the mortgagor and any next registered proprietor or mortgagee. Where the mortgagor will not be protected by the rights to light indemnity insurance policy, you must advise the borrower of this fact.
- the rights to light indemnity insurance policy should not incorporate terms which you know would invalidate or prejudice the interests of the mortgage company
| Lender | Requirement |
|---|---|
| Adam & Company | 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.]
|
| 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. |
| Cynergy Bank | The market value of the property. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| 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. |
| Manchester Building Society | Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%. |
| Mortgage Express | Amount of loan + 15% |
| 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. |
| TSB | The value of the property |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| RBS (One Account) | An amount equal to the value of the property. |
| RBS - Virgin One | An amount equal to the value of the property. |
| Together Personal Finance | Minimum of £2,000,000.00 per claim. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
| Yorkshire Bank | Open market value of property. |
| Zephyr Mortgages | 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. |
General Rights to Light indemnity insurance points to consider
The full terms, conditions and exclusions for rights to light indemnity insurance are identified in the policy paperwork. Property lawyers are obliged to direct the borrower to the rights to light indemnity insurance policy itself. The intention of rights to light indemnity insurance is to grant indemnity in respect of the risks specified in the policy schedule - so you should check the document to ensure it is as it should be. The continuance of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.Important features and benefits of rights to light indemnity 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. Rights to Light indemnity insurance Cover normally includes- All sums paid with consent in writing from the insurance company to free the land from the risks specified in the rights to light policy.
- All ancillary 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, 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 order.
- Loss in market value due to the successful enforcement of the risks specified in the rights to light insurance.
- Liability for damages or compensation incurred in any action regarding the risks specified in the rights to light policy, including solicitors charges.
- 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.
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 rest assured that the insurer will check the details on any proposal form very carefully prior to any claim being met.
Supplemental considerations for rights to light indemnity insurance
Rights to Light Indemnity insurance isn’t a solution to all of the relevant problems. Information provided on 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 mortgage company 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 is in relation to properties in England and Wales.