Indemnity Insurance of Rights to Light Mortgage Company conveyancing instructions
Accord and Barclays, in common with the majority of lenders, dictate their own requirements when it comes to rights to light indemnity insurance. This page sets out to enlighten property law solicitors on the various lender approved list of panel lawyers where the title to be charged incorporates rights to light. It is not a substitute for checking the CML handbook requirements for each bank, for example RBS, HSBC or Barnsley BS. The information on this page is not focused on rights to light indemnity insurance requirements.
Need help with rights to light indemnity insurance from your lender?
Yorkshire Building Society and Birmingham Midshires like many banks, requirements are that where rights to light indemnity insurance is effected:
- the level of indemnity must satisfy the requirements for the lender (See Part II Handbook requirements )
- the rights to light indemnity insurance policy should not contain terms that you are aware would void or prejudice the interests of the bank
- the rights to light indemnity insurance policy should be effected without cost to the lender
- your practice must spell out to the borrower 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 policy
- you are responsible for approving the terms of the rights to light policy on behalf of the mortgage company
- you is required to reveal to the insurer all relevant information which you have gathered
- your practice must provide a copy 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 additional insurance may 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 bank and, wherever possible, in favour of the mortgagor and any future owner or bank. If the borrower will not be protected by the rights to light indemnity insurance policy, the mortgagor should be advised accordingly.
| Lender | Requirement |
|---|---|
| April Mortgages | |
| Aviva Equity Release | |
| Fleet Mortgages | |
| HSBC UK Bank | |
| Hampden | |
| Hinckley and Rugby | |
| Kensington Mortgage | |
| Manchester Building Society | |
| Molo Finance Buy to Let | |
| Mortgage Express (No 2) | |
| New Street Mortgages | |
| Paragon Residential | |
| Reliance Bank | |
| Santander | |
| Scottish Building Society | |
| Scottish Widows | |
| State Bank of India UK | |
| The Mortgage Works | |
| RBS- First Active | |
| Vida Homeloans |
Non lender-specific considerations
The extent of the terms for rights to light indemnity insurance are set out in the policy document. Property lawyers should direct the borrower to the rights to light indemnity insurance policy itself. Rights to Light indemnity insurance is devised to afford indemnity in respect of the risks specified in the policy schedule - so it’s important to check any draft to ensure it is correct. The duration 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 Contingency insurance: Important characteristics and benefits:
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- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- 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 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 action concerning the risks specified in the rights to light indemnity insurance, as well as fees of a legal nature.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development commenced, 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 decision.
- Loss in market value resulting from the successful enforcement of the risks specified in the rights to light indemnity insurance.
Always consider what is not included in the rights to light policy e.g. does the policy cover any residence that has been altered within the year prior to the policy being put on risk? Does it cover legal costs?
Rights to Light Indemnity Insurance has limitations - Additional considerations
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. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the bank solicitor 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 above information covers to properties in England and Wales.