Unknown Rights and Easements Indemnity Insurance Lender conveyancing requirements
Natwest and Godiva Mortgages, in common with most lenders, have their own requirements when it comes to unknown rights and easements indemnity insurance. The purpose of this page to assist conveyancing lawyers on the various bank solicitors panel where the title for the the property to be mortgaged includes unknown rights and easements. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each bank, for example Halifax, Virgin Money or Leeds Building Society. The information on this page is not focused on unknown rights and easements indemnity insurance requirements.
Need help with unknown rights and easements indemnity insurance from your lender?
HSBC and RBS like many mortgage companies, instructions are such that where unknown rights and easements indemnity insurance is to be taken out:
- the level of indemnity must satisfy the requirements for the lender (See Part II Handbook requirements )
- the unknown rights and easements indemnity insurance policy must be effected without charge to the lender
- you are responsible for approving the terms of the unknown rights and easements policy on behalf of the bank
- you must supply a copy of the unknown rights and easements indemnity insurance to the borrower and explain to the borrower why the unknown rights and easements indemnity insurance policy was effected and that a further policy may be necessary if there is supplemental borrowing against the mortgaged property
- the unknown rights and easements indemnity insurance policy must be in favor of the lender and, wherever possible, for the benefit of the mortgagor and any subsequent registered proprietor or bank. If the mortgagor will not be protected by the unknown rights and easements indemnity insurance policy, the mortgagor must be informed accordingly.
- you must spell out to the borrower that the borrower must comply with any conditions of the unknown rights and easements indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the policy
- your firm is required to reveal to the insurer all relevant information which you have gathered
- the unknown rights and easements indemnity insurance policy must not contain terms which you are aware would invalidate or compromise the interests of the mortgage company
| Lender | Requirement |
|---|---|
| Britannia | Cover to the full value of the property. |
| Coutts & Co | The open market value of the property according to the valuation report. |
| 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 |
| Family Building Society | An amount at least equal to the mortgage advance. |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Habito | Higher of purchase price or valuation |
| Holmesdale Building Society | 110% |
| Manchester Building Society | Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%. |
| 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. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Mortgage Express | Amount of loan + 15% |
| Mortgage Express (No 2) | [This lender has not published an answer to this question. Please contact the lender.]
|
| National Counties Building Society | An amount at least equal to the mortgage advance. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Principality Building Society | Full market value of the property is preferred but if this is not available we will accept the loan advance amount as minimum. You must approve the policy on our behalf. The estimated property value is stated in the Mortgage Offer in remortgage cases. Otherwise it will be stipulated in the Valuation. |
| 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. |
| RBS (One Account) | 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. |
Non lender-specific considerations
The extent of the terms for unknown rights and easements indemnity insurance are identified in the policy document. Conveyancing Practitioners are obliged to direct the borrower to the unknown rights and easements indemnity insurance policy document. The intention of unknown rights and easements indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so you should check the schedule to determine that it is correct. The lifetime 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.Unknown Rights and Easements indemnity insurance: Significant features 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. Unknown Rights and Easements indemnity insurance Cover normally includes- Reimbursement for compensation incurred in any action in respect of the risks specified in the unknown rights and easements insurance, including incurred costs and expenses.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurer
- 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.
- Loss in market value due to the successful enforcement of the risks specified in the unknown rights and easements policy.
- All sums paid with consent in writing from the insurance company to liberate the property from the risks specified in the unknown rights and easements 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 unknown rights and easements insurance, to the extent that such costs are rendered abortive by court decision.
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 unknown rights and easements policy will not be valid.
Additional considerations for unknown rights and easements indemnity insurance
There may be consequences arising from the enforcement of the risks identified in the unknown rights and easements indemnity insurance which are not adequately covered by financial compensation. Content on this webpage is for general information for conveyancers and solicitors 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 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 unknown rights and easements Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The content set out above is in relation to properties in England and Wales.