Indemnity Insurance of Good Leasehold Title Mortgage Company conveyancing instructions
Barclays and Leeds Building Society, in common with most banks, dictate their own requirements when it comes to good leasehold title indemnity insurance. This page sets out to enlighten domestic conveyancing lawyers on the numerous mortgage company conveyancing panel where the title to be charged includes good leasehold title. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each bank, for example Halifax, Santander or Lloyds TSB. The information on this page is not focused on good leasehold title indemnity insurance requirements.
Need help with good leasehold title indemnity insurance from your lender?
Godiva Mortgages and HSBC as with the majority of mortgage companies, requirements are that where good leasehold title indemnity insurance is to be put on risk:
- the level of indemnity must satisfy the requirements for the lender (See Part II Handbook requirements )
- you is obliged to disclose to the insurer all relevant information which you have gathered
- your firm must supply a copy of the good leasehold title indemnity insurance to the borrower and explain to the mortgagor why the good leasehold title indemnity insurance policy was effected and that a further policy may be mandatory if there is supplemental borrowing against the mortgaged property
- you must approve the terms of the good leasehold title policy on behalf of the mortgage company
- you is duty bound to explain to the borrower that the borrower will need to adhere to any conditions of the good leasehold title indemnity insurance policy and that the borrower should notify the lender of any notice or potential claim in relation to the insurance
- the good leasehold title indemnity insurance policy should not incorporate conditions that you know would void or prejudice the interests of the lender
- the good leasehold title indemnity insurance policy must be placed on risk without expense to the lender
- the good leasehold title indemnity insurance policy must be in favor of the lender and, if possible, for the benefit of the mortgagor and any future owner or bank. If the borrower will not be protected by the good leasehold title indemnity insurance policy, the borrower must be informed accordingly.
| 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. |
| Accord Mortgages | 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. |
| April Mortgages | An amount at least equal to the mortgage advance. |
| Aviva Equity Release | Full value of the property. |
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| HSBC UK Bank | The value of the insurance must be for at least the full value of the property |
| Hampden | The open market value of the property according to the valuation report. |
| Holmesdale Building Society | 110% |
| Kensington Mortgage | Must be for a minimum of 110% of the purchase price or valuation whichever is the greatest. |
| Lloyds | The value of the property. |
| Masthaven Bank | 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. |
| Metro Bank | The open market value of the property according to the valuation report. |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Pepper Money (UK) | 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). |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Saffron Building Society | Higher of purchase price or valuation. 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). |
| Ulster Bank | An amount equal to the value of the property. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
| Yorkshire Building Society | 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. |
Good Leasehold Title Contingency Insurance : Reflections
The extent of the terms for good leasehold title indemnity insurance are identified in the policy paperwork. Conveyancing Practitioners are obliged to point the borrower to the good leasehold title indemnity insurance policy itself. The intention of good leasehold title indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so it’s important to check the schedule to determine that it is correct. 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.Important features and benefits of good leasehold title 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. Good Leasehold Title indemnity insurance Policies are likely to cover the following- Reimbursement for compensation incurred in any proceedings concerning the risks specified in the good leasehold title indemnity insurance, including fees of a legal nature.
- Expenses for 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 good leasehold title indemnity insurance, to the extent that such costs are rendered abortive by court order.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Loss in market value due to the successful enforcement of the risks specified in the good leasehold title indemnity insurance.
- The cost of altering or destroying 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.
- Money paid with consent in writing from the insurance company to liberate the land from the risks specified in the good leasehold title policy.
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 good leasehold title policy will be invalidated.
Supplemental considerations for good leasehold title indemnity insurance
There may be consequences arising from the enforcement of the risks identified in the good leasehold title insurance which are not adequately covered by financial compensation. Information provided on this webpage is for general information for Regulated law firms 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 good leasehold title 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.