Indemnity Insurance of Local Search Lender conveyancing instructions
Leeds Building Society and Lloyds TSB, in common with the majority of lenders, have their own specific instructions when it comes to local search indemnity insurance. This page sets out to enlighten conveyancing lawyers on the numerous lender approved list of panel lawyers where the title to be charged incorporates local search. Solicitors should still check the CML handbook requirements for each mortgage company, whether it be Halifax, Accord or Coventry BS. The information on this page is not focused on local search indemnity insurance requirements.
Need help with local search indemnity insurance from your lender?
Skipton and Godiva Mortgages as with many banks, obligations require that where local search indemnity insurance is to be put on risk:
- your firm must send a copy of the local search indemnity insurance to the mortgagor and explain to the borrower why the local search indemnity insurance policy was effected and that additional insurance could be mandatory if there is supplemental borrowing against the mortgaged property
- your firm must approve the terms of the local search policy on behalf of the lender
- the local search indemnity insurance policy must be effected at no charge to the lender
- the local search indemnity insurance policy must be for the benefit of the mortgage company and, if possible, for the benefit of the borrower and any future owner or lender. If the mortgagor will not be covered by the local search indemnity insurance policy, you must advise the mortgagor of this fact.
- you must explain to the borrower that the borrower is obliged to comply with any conditions of the local search indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in relation to the policy
- you is obliged to disclose to the insurer all relevant information which you have acquired
- the minimum level of cover for the policy must satisfy the requirements for the bank (See Part II Handbook requirements )
- the local search indemnity insurance policy must not contain terms that you are aware would void or prejudice the interests of the bank
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Barclays plc | Higher of purchase price or valuation |
| Chelsea 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. |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Halifax | An amount at least equal to the mortgage advance. |
| Halifax Loans | An amount at least equal to the mortgage advance. |
| Landmark | 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. |
| Magellan Homeloans | At least equal to the value of the property |
| Metro Bank | The open market value of the property according to the valuation report. |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the advance. |
| Perenna | The higher of the purchase price or valuation. |
| Platform | 110% of principal sum. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Scottish Building Society | Amount of mortgage plus 25%. |
| Secure Trust Bank | An amount at least equal to the market value. 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). |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| Royal Bank of Scotland | An amount equal to the value of the property. |
| RBS - Direct Line | An amount equal to the value of the property. |
| RBS - Direct Line One | An amount equal to the value of the property. |
Non lender-specific considerations
The full terms, conditions and exclusions for local search indemnity insurance are identified in the policy paperwork. Conveyancing Practitioners should point your non-lender client to the local search indemnity insurance policy paperwork. Local Search indemnity insurance is devised to provide indemnity in respect of the risks specified in the policy schedule - so you should check the schedule to determine that it is in order. The continuance of this non-investment insurance agreement is in perpetuity unless otherwise stated in the local search indemnity insurance policy. Adequacy in this regard should be checked.Important aspects and benefits of local search 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. Local Search indemnity insurance Policies are likely to cover the following- All sums paid with consent in writing from the insurance company to liberate the land from the risks specified in the local search policy.
- 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 concerning the risks specified in the local search insurance, as well as legal and associated costs.
- Expenses for works (including professional fees) for the purpose of the development begun, or contracted for, prior to proceedings for the enforcement of the risks specified in the local search indemnity insurance, to the extent that such costs are rendered abortive by court decision.
- Market value reduction due to the successful enforcement of the risks specified in the local search insurance.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
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 local search policy will be invalidated.
Local Search Indemnity Insurance has limitations - Supplemental considerations
Local Search 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 local search indemnity cover will not necessarily be the answer. Information provided on this webpage is for general information for Regulated law firms in England and Wales on the the lender conveyancing 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 local search 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.