Rights to Light Indemnity Insurance Bank conveyancing requirements
Santander and HSBC, in common with the majority of mortgage companies, dictate their own specific instructions when it comes to rights to light indemnity insurance. The purpose of this page to assist conveyancing solicitors on the numerous lender conveyancing panel where the title to be charged contains rights to light. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each lender, for example Bank of Scotland, Barclays or Natwest. 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?
Leeds Building Society and Halifax in common with the majority of mortgage companies, instructions are such that where rights to light indemnity insurance is effected:
- your firm must spell 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 borrower should notify the lender of any notice or potential claim in respect of the policy
- the limit of indemnity must satisfy the requirements for the bank (See Part II Handbook requirements )
- the rights to light indemnity insurance policy needs to be for the benefit of the mortgage company and, if possible, in favour of the borrower and any subsequent registered proprietor or bank. Where the borrower 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 terms which you know would invalidate or compromise the interests of the bank
- the rights to light indemnity insurance policy must be placed on risk without cost to the lender
- you must reveal to the insurer all relevant information which you have acquired
- your firm are responsible for approving the terms of the rights to light policy on behalf of the mortgage company
- you must supply a duplicate of the rights to light indemnity insurance to the mortgagor and explain to the borrower why the rights to light indemnity insurance policy was effected and that additional insurance might be necessary if there is additional lending against the security of the property
| Lender | Requirement |
|---|---|
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Clydesdale Bank | Open market value of property. |
| 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. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| Godiva Mortgages | Minimum of the value of the property. |
| Investec | The open market value of the property according to the valuation report. |
| 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. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| 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). |
| Progressive BS | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher. |
| 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). |
| TSB | The value of the property |
| Together Personal Finance | Minimum of £2,000,000.00 per claim. |
| Topaz Finance | 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. |
| 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 shown in the policy paperwork. Conveyancing Practitioners are obliged to direct the borrower to the rights to light indemnity insurance policy itself. Rights to Light indemnity insurance is devised to grant indemnity in respect of the risks specified in the policy schedule - so you should check the document to determine that it is in order. The duration of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.Rights to Light Contingency insurance: Significant features and benefits:
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 Policies should be checked for the following- All sums paid with consent in writing from the insurance company to liberate the property from the risks specified in the rights to light insurance.
- 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 policy, to the extent that such costs are rendered abortive by court decision.
- Reimbursement for compensation incurred in any proceedings regarding the risks specified in the rights to light indemnity insurance, as well as incurred costs and expenses.
- The out of pocket expenses 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.
- Diminution in value resulting from the successful enforcement of the risks specified in the rights to light insurance.
- All other costs and expenses incurred by the Insured with the written consent of 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 be invalidated.
Rights to Light Indemnity Insurance has limitations - Other considerations
Rights to Light Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that rights to light indemnity cover will not necessarily be the answer. Information provided on this webpage is for general information for Regulated law firms in England and Wales on the the lender solicitor 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.