Rights to Light Indemnity Insurance Mortgage Company conveyancing requirements
Leeds Building Society and Virgin Money, as with the majority of mortgage companies, have their own requirements when it comes to rights to light indemnity insurance. The purpose of this page to assist domestic conveyancing solicitors on the numerous bank approved list of panel lawyers where the title for the the property to be mortgaged includes rights to light. Lawyers are advised to familiarise themselves with the CML handbook requirements for each bank, whether it be HSBC, Barnsley BS or Santander. The information 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 Bank of Scotland in common with many lenders, obligations require that where rights to light indemnity insurance is effected:
- your practice must point out to the mortgagor that the borrower must 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 relation to the insurance
- the rights to light indemnity insurance policy must be placed on risk without charge to the lender
- the rights to light indemnity insurance policy needs to be in favor of the mortgage company and, wherever possible, for the benefit of the mortgagor and any next registered proprietor or lender. Where the mortgagor will not be covered by the rights to light indemnity insurance policy, the borrower needs to be informed accordingly.
- the minimum level of cover for the policy must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
- you must reveal to the insurer all relevant information which you have gathered
- the rights to light indemnity insurance policy must not incorporate terms which you recognise would void or compromise the interests of the mortgage company
- you 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 additional insurance may be required if there is further lending against the security of the property
- your firm are responsible for approving the terms of the rights to light policy on behalf of the lender
| Lender | Requirement |
|---|---|
| Allied Irish Bank | At least the amount of the mortgage advance. |
| Chelsea 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. |
| Cynergy Bank | The market value of the property. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Habito | Higher of purchase price or valuation |
| 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. |
| Magellan Homeloans | At least equal to the value of the property |
| Mortgage Express | Amount of loan + 15% |
| Mortgage Express (No 2) | [This lender has not published an answer to this question. Please contact the lender.]
|
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Paragon Residential | 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 |
| 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). |
| Perenna | The higher of the purchase price or valuation. |
| Reliance Bank | \xA31,000,000.00 |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| RBS - Virgin One | An amount equal to the value of the property. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
General Rights to Light indemnity insurance points to consider
The full terms, conditions and exclusions for rights to light indemnity insurance are explained in the policy document. Conveyancing Practitioners are obliged to direct your non-lender client to the rights to light indemnity insurance policy document. The intention of rights to light indemnity insurance is to afford indemnity in respect of the risks set out in the policy schedule - so it is essential check the document to determine that it is in order. The lifetime 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.Rights to Light Contingency insurance: Significant characteristics and benefits:
The insurance 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- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- Expenses for works (including professional fees) for the purpose of the development begun, or contracted for, before the commencement of 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.
- Money paid with consent in writing from the insurance company to free the property from the risks specified in the rights to light policy.
- 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 in respect of the risks specified in the rights to light insurance, including solicitors charges.
- Market value reduction resulting from the successful enforcement of the risks specified in the rights to light indemnity insurance.
Don't forget to consider what is not included in the rights to light insurance e.g. does the policy cover any property that has been altered within the 12 months prior to the commencement of the policy? Does it cover legal costs?
Supplemental considerations for rights to light indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from rights to light insurance may be adequate for your client. Content on 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 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.