Unknown Rights and Easements Indemnity Insurance Mortgage Company conveyancing requirements

Yorkshire Bank Home Loans and Birmingham Midshires, in common with most banks, have their own requirements when it comes to unknown rights and easements indemnity insurance. This page is designed to help domestic conveyancing solicitors on the various mortgage company approved list of panel lawyers where the title to be charged contains unknown rights and easements. It is not a alternative for checking the CML handbook requirements for each mortgage company, for example Halifax, Barclays or Lloyds TSB. The content on this page Is not to be read as unknown rights and easements indemnity insurance advice.

Need help with unknown rights and easements indemnity insurance from your lender?

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Natwest and Leeds Building Society like most mortgage companies, requirements are that where unknown rights and easements indemnity insurance is to be taken out:

• you must approve the terms of the unknown rights and easements policy on behalf of the mortgage company
• the level of indemnity must meet the requirements for the mortgage company (See Part II Handbook requirements )
• the unknown rights and easements indemnity insurance policy needs to be in favor of the mortgage company and, if possible, for the benefit of the mortgagor and any subsequent registered proprietor or lender. Where the borrower will not be protected by the unknown rights and easements indemnity insurance policy, you must advise the mortgagor of this fact.
• your firm must send a duplicate of the unknown rights and easements indemnity insurance to the mortgagor and explain to the borrower why the unknown rights and easements indemnity insurance policy was effected and that a further policy could be required if there is further borrowing against the mortgaged property
• the unknown rights and easements indemnity insurance policy should not contain terms which you know would invalidate or compromise the interests of the mortgage company
• your firm must reveal to the insurer all relevant information which you have acquired
• the unknown rights and easements indemnity insurance policy should be effected at no cost to the mortgage company
• you must spell out to the mortgagor that the borrower must comply with any conditions of the unknown rights and easements indemnity insurance policy and that the borrower should notify the bank of any notice or potential claim in relation to the insurance

As to the level of cover for the unknown rights and easements indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Section 9.2 of the CML handbook PII requirements for lenders:

Unknown Rights and Easements Contingency Insurance : Reflections

The full terms, conditions and exclusions for unknown rights and easements indemnity insurance are explained in the policy paperwork. Property lawyers are obliged to direct your non-lender client to the unknown rights and easements indemnity insurance policy itself. 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 ensure it is as it should be. 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.

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Significant characteristics and benefits of unknown rights and easements indemnity insurance :

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 Policies are likely to cover the following

• The cost 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.
• Liability for damages or compensation incurred in any action in respect of the risks specified in the unknown rights and easements indemnity insurance, as well as incurred costs and expenses.
• Money paid with the written consent of the insurance company to liberate the land from the risks specified in the unknown rights and easements insurance.
• Diminution in value due to the successful enforcement of the risks specified in the unknown rights and easements policy.
• All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
• The cost of works (including professional fees) for the purpose of the development started, 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 order.

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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 be invalidated.

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Further considerations for unknown rights and easements indemnity insurance

Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from unknown rights and easements insurance may be adequate for your client.

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The content set out above is in relation to properties in England and Wales.