Lender conveyancing panel conditions re Contaminated Land Indemnity Insurance

Barnsley BS and Yorkshire Building Society, like most mortgage companies, have their own specific instructions when it comes to contaminated land indemnity insurance. This page is designed to help domestic conveyancing solicitors on the numerous bank solicitors panel where the title to be charged includes contaminated land. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each mortgage company, be it Natwest, Nationwide or HSBC. The information on this page is not focused on contaminated land indemnity insurance requirements.

Need help with contaminated land indemnity insurance from your lender?

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Santander and Skipton as with the majority of mortgage companies, obligations require that where contaminated land indemnity insurance is to be put on risk:

• the limit of indemnity must meet the requirements for the mortgage company (See Part II Handbook requirements )
• you is duty bound to explain to the borrower that the borrower is obliged to comply with any conditions of the contaminated land indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in respect of the insurance
• your practice must supply a copy of the contaminated land indemnity insurance to the borrower and explain to the borrower why the contaminated land indemnity insurance policy was effected and that additional insurance might be required if there is additional borrowing against the security of the property
• the contaminated land indemnity insurance policy should not incorporate terms which you are aware would void or compromise the interests of the mortgage company
• you is obliged to disclose to the insurer all relevant information which you have gathered
• the contaminated land indemnity insurance policy must be placed on risk without charge to the lender
• your firm must approve the terms of the contaminated land policy on behalf of the lender
• the contaminated land indemnity insurance policy needs to be in favor of the lender and, if possible, for the benefit of the borrower and any future registered proprietor or mortgage company. If the borrower will not be protected by the contaminated land indemnity insurance policy, the mortgagor must be advised accordingly.

Regarding the extent of cover for the contaminated land indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Paragraph 9.2 of the Part 2 requirements for banks:

General Contaminated Land indemnity insurance points to consider

The extent of the terms for contaminated land indemnity insurance are set out in the policy paperwork. Conveyancing Practitioners are obliged to point your non-lender client to the contaminated land indemnity insurance policy itself. Contaminated Land indemnity insurance is designed to grant indemnity in respect of the risks specified in the policy schedule - so you should check any draft to determine that it is as it should be. The continuance 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.

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Important features and benefits of contaminated land Contingency insurance :

The policy will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the contaminated land indemnity insurance schedule. Contaminated Land indemnity insurance Cover normally includes

• Liability for damages or compensation incurred in any action regarding the risks specified in the contaminated land indemnity insurance, including incurred costs and expenses.
• All sums paid with the written consent of the insurance company to liberate the property from the risks specified in the contaminated land policy.
• The cost of works (including professional fees) for the purpose of the development commenced, before the commencement of proceedings for the enforcement of the risks specified in the contaminated land policy, to the extent that such costs are rendered abortive by court order.
• All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
• 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 due to the successful enforcement of the risks specified in the contaminated land policy.

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Always consider what is excluded from the contaminated land insurance e.g. does the policy cover any property that has been altered within the 12 months prior to the policy being put on risk? Does it cover legal costs?

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Contaminated Land Indemnity Insurance has limitations - Additional considerations

Contaminated Land 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 contaminated land indemnity cover will not necessarily be the answer.

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The above information is in relation to properties in England and Wales.