Lender conveyancing panel requirements re Contingent Buildings Indemnity Insurance
Barnsley BS and Natwest, like most mortgage companies, set their own specific instructions when it comes to contingent buildings indemnity insurance. The content herein aims to help conveyancing lawyers on the numerous mortgage company solicitors panel where the title to be charged includes contingent buildings. Lawyers are advised to familiarise themselves with the CML handbook requirements for each mortgage company, for example RBS, Yorkshire Bank Home Loans or Santander. The content on this page Is not to be read as contingent buildings indemnity insurance advice.
Need help with contingent buildings indemnity insurance from your lender?
Leeds Building Society and Halifax as with the majority of lenders, instructions are such that where contingent buildings indemnity insurance is to be taken out:
- you must supply a copy of the contingent buildings indemnity insurance to the mortgagor and explain to the borrower why the contingent buildings indemnity insurance policy was effected and that a further policy might be necessary if there is supplemental lending against the security of the property
- the minimum level of cover for the policy must meet the requirements for the mortgage company (See Part II Handbook requirements )
- your firm must approve the terms of the contingent buildings policy on behalf of the lender
- your practice is obliged to reveal to the insurer all relevant information which you have obtained
- the contingent buildings indemnity insurance policy must not incorporate terms which you know would invalidate or prejudice the interests of the bank
- the contingent buildings indemnity insurance policy needs to be in favor of the bank and, wherever possible, for the benefit of the mortgagor and any future registered proprietor or mortgagee. Where the mortgagor will not be protected by the contingent buildings indemnity insurance policy, you must advise the mortgagor of this fact.
- the contingent buildings indemnity insurance policy should be effected at no cost to the lender
- your firm is duty bound to spell out to the borrower that the borrower must comply with any conditions of the contingent buildings indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in respect of the insurance
| Lender | Requirement |
|---|---|
| Accord 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 mortgagee. |
| Atom Bank | At least the open market value of the property according to the valuation report. |
| Birmingham Bank | Please contact Head of Operations to discuss (Gareth Allen) |
| Coventry Building Society | Minimum of the value of the property. |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Handelsbanken | Purchase price or 110% of mortgage advance, whichever is the greater. |
| Hinckley and Rugby | The policy must be for our benefit and for no less than the amount lent to the borrower, including retentions, stage payments and interest. |
| ITL Mortgages | Minimum of the value of the property. |
| Lloyds | The value of the property. |
| Lloyds TSB Scotland | The value of the property |
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| 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). |
| Santander | The purchase price or (if lower) 110% of the mortgage advance. |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| RBS - Direct Line | An amount equal to the value of the property. |
| 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. |
| Ulster Bank | An amount equal to the value of the property. |
| Whistletree | The value of the property |
Contingent Buildings Contingency Insurance : Reflections
The extent of the terms for contingent buildings indemnity insurance are identified in the policy paperwork. Property lawyers are obliged to point your non-lender client to the contingent buildings indemnity insurance policy document. Contingent Buildings Contingency insurance is devised to grant indemnity in respect of the risks set out in the policy schedule - so it’s important to check the document to ensure it is in order. The duration of this non-investment insurance agreement is in perpetuity unless otherwise stated in the contingent buildings indemnity insurance policy. Again, please check that this is as you expected.Significant features and benefits of contingent buildings indemnity insurance :
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. Contingent Buildings indemnity insurance Policies should be checked for the following- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- 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 contingent buildings indemnity insurance, to the extent that such costs are rendered abortive by court order.
- 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.
- Loss in market value due to the successful enforcement of the risks specified in the contingent buildings indemnity insurance.
- Cover for compensation incurred in any action regarding the risks specified in the contingent buildings insurance, including incurred costs and expenses.
- Money paid with consent in writing from the insurance company to free the property from the risks specified in the contingent buildings indemnity insurance.
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 contingent buildings policy will be invalidated.
Supplemental considerations for contingent buildings indemnity insurance
Contingent Buildings insurance may satisfy lenders such as Godiva Mortgages or Accord and prevent clients from from suffering financially but it cannot compensate for the stress and inconvenience the emotional suffering - after all the value of a home cannot always be measured in cash in the eyes of the owner. Information provided on this webpage is for general information for Regulated law firms 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 bank 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 contingent buildings 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 is in relation to properties in England and Wales.