Adoption of Road or Sewer Indemnity Insurance Mortgage Company conveyancing requirements
Lloyds TSB and Accord, like most banks, set their own specific instructions when it comes to adoption of road or sewer indemnity insurance. This page sets out to enlighten property law solicitors on the different lender conveyancing panel where the title for the the property to be mortgaged contains adoption of road or sewer. It is not a substitute for checking the CML handbook requirements for each lender, for example Yorkshire Building Society, Birmingham Midshires or Bank of Scotland. The content on this page is not focused on adoption of road or sewer indemnity insurance requirements.
Need help with adoption of road or sewer indemnity insurance from your lender?
Skipton and Chelsea BS in common with most mortgage companies, instructions are such that where adoption of road or sewer indemnity insurance is to be taken out:
- the adoption of road or sewer indemnity insurance policy must be placed on risk at no expense to the lender
- your firm must point out to the borrower that the borrower is obliged to comply with any conditions of the adoption of road or sewer indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in respect of the insurance
- your firm must disclose to the insurer all relevant information which you have obtained
- the adoption of road or sewer indemnity insurance policy must not incorporate terms which you recognise would invalidate or prejudice the interests of the bank
- the limit of indemnity must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
- you are responsible for approving the terms of the adoption of road or sewer policy on behalf of the mortgage company
- your firm must supply a copy of the adoption of road or sewer indemnity insurance to the borrower and explain to the borrower why the adoption of road or sewer indemnity insurance policy was effected and that a further policy may be required if there is supplemental lending against the security of the property
- the adoption of road or sewer indemnity insurance policy must be in favor of the bank and, wherever possible, in favour of the mortgagor and any next registered proprietor or bank. If the mortgagor will not be protected by the adoption of road or sewer indemnity insurance policy, the mortgagor should be advised accordingly.
| Lender | Requirement |
|---|---|
| Adam & Company International | The open market value of the property according to the valuation report. |
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| Bluestone Mortgages | An amount at least equal to the total 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. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| GE Money | GE Money Home Lending has withdrawn from the UK mortgage market. |
| Hampden | The open market value of the property according to the valuation report. |
| Intelligent Finance | 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. |
| LendInvest | An amount at least equal to the valuation of the property. |
| Lloyds | The value of the property. |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the advance. |
| NRAM Ltd | Preference for full market value of the property, but if this level of cover is not available, will accept a minimum of the actual loan amount. You must approve the policy on our behalf. |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Perenna | The higher of the purchase price or valuation. |
| RBS - Virgin One | An amount equal to the value of the property. |
| Zephyr Mortgages | 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. |
Non lender-specific considerations
The full terms, conditions and exclusions for adoption of road or sewer indemnity insurance are set out in the policy paperwork. Property lawyers are obliged to point the borrower to the adoption of road or sewer indemnity insurance policy itself. Adoption of Road or Sewer Contingency insurance is devised to grant indemnity in respect of the risks specified in the policy schedule - so you should check any draft to determine that it is correct. The lifetime of this non-investment insurance contract is in perpetuity unless otherwise stated in the adoption of road or sewer indemnity insurance policy. Again, please check that this is as you expected.Adoption of Road or Sewer Contingency insurance: Significant characteristics and benefits:
This policy would usually provide protection from financial loss that might arise in the event of a third party making a cliam in respect of the risks identified in the policy document. Adoption of Road or Sewer indemnity insurance Policies should be checked for the following- All sums paid with consent in writing from the insurance company to free the land from the risks specified in the adoption of road or sewer insurance.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development started, prior to proceedings for the enforcement of the risks specified in the adoption of road or sewer indemnity insurance, to the extent that such costs are rendered abortive by court decision.
- 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.
- Cover for compensation incurred in any proceedings regarding the risks specified in the adoption of road or sewer indemnity insurance, including incurred costs and expenses.
- Loss in market value due to the successful enforcement of the risks specified in the adoption of road or sewer policy.
Don't forget to consider what is not included in the adoption of road or sewer insurance e.g. does the policy cover any property that has been altered within the 12 months prior to the commencement of the policy? Are legal costs covered?
Supplemental considerations for adoption of road or sewer indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from adoption of road or sewer insurance may be adequate for your client. Information provided on this webpage is for general information for conveyancers and solicitors 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 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 adoption of road or sewer 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 covers to properties in England and Wales.