Indemnity Insurance of Rights to Light Bank conveyancing requirements
HSBC and RBS, in common with most lenders, dictate their own requirements when it comes to rights to light indemnity insurance. This page is designed to help conveyancing firms on the numerous bank conveyancing panel where the title for the the property to be mortgaged includes rights to light. Solicitors should still check the CML handbook requirements for each lender, be it Chelsea BS, Santander or Godiva Mortgages. 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?
Virgin Money and Yorkshire Bank Home Loans like the majority of mortgage companies, instructions are such that where rights to light indemnity insurance is to be put on risk:
- the rights to light indemnity insurance policy should not contain terms that you are aware would invalidate or prejudice the interests of the bank
- the rights to light indemnity insurance policy should always be in favor of the mortgage company and, if possible, for the benefit 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 are responsible for approving the terms of the rights to light policy on behalf of the bank
- your firm is obliged to reveal to the insurer all relevant information which you have obtained
- the rights to light indemnity insurance policy should be placed on risk at no cost to the lender
- the level of indemnity must meet the requirements for the lender (See Part II Handbook requirements )
- your practice must supply a duplicate of the rights to light indemnity insurance to the borrower and explain to the mortgagor why the rights to light indemnity insurance policy was effected and that a further policy may be mandatory if there is supplemental lending against the security of the property
- your practice is duty bound to point out to the borrower that the borrower will need to comply with any conditions of the rights to light indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in respect of the insurance
| Lender | Requirement |
|---|---|
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| Atom Bank | At least the open market value of the property according to the valuation report. |
| Aviva Equity Release | Full value of the property. |
| Bradford & Bingley | Amount of loan + 15% |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Coutts Finance | The open market value of the property according to the valuation report. |
| Cynergy Bank | The market value of the property. |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| JPMorgan | 110% of principal sum. |
| 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. |
| Lloyds | The value of the property. |
| Lloyds | The value of the property. |
| 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. |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the advance. |
| Pepper Money | An amount equal to at least 110% of the purchase price or value, whichever is higher. 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). |
| Secure Trust Bank | An amount at least equal to the market value. 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). |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| Royal Bank of Scotland | An amount equal to the value of the property. |
| Ulster Bank | An amount equal to 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 identified in the policy paperwork. Conveyancing solicitors should direct your non-lender client to the rights to light indemnity insurance policy itself. Rights to Light indemnity insurance is designed to afford indemnity in respect of the risks set out 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 contract is in perpetuity unless the policy says something to the contrary. Adequacy in this regard should be checked.Rights to Light indemnity 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. Rights to Light indemnity insurance Policies should be checked for the following- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- 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.
- Reimbursement for compensation incurred in any action regarding the risks specified in the rights to light insurance, as well as solicitors charges.
- Money paid with the written consent of the insurance company to free the land from the risks specified in the rights to light insurance.
- The cost of works (including professional fees) for the purpose of the development begun, or contracted for, prior to 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 decision.
- Diminution in value due to the successful enforcement of the risks specified in the rights to light indemnity insurance.
Don't forget to consider what is excluded from the rights to light policy e.g. does the policy cover any property that has been altered within the 12 months prior to the commencement of the policy? Are legal costs covered?
Rights to Light Indemnity Insurance has limitations - Additional considerations
Rights to Light Indemnity insurance isn’t a solution to all of the relevant problems. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company approved 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 covers to properties in England and Wales.