Bank conveyancing panel conditions re Local Search Indemnity Insurance
Bank of Scotland and Natwest, like most lenders, set their own specific instructions when it comes to local search indemnity insurance. The purpose of this page to assist conveyancing lawyers on the numerous mortgage company approved list of panel lawyers where the title for the the property to be mortgaged incorporates local search. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each mortgage company, for example Leeds Building Society, Skipton or Coventry BS. The content on this page Is not to be read as local search indemnity insurance advice.
Need help with local search indemnity insurance from your lender?
Chelsea BS and RBS in common with most banks, obligations require that where local search indemnity insurance is to be taken out:
- the local search indemnity insurance policy should be effected without charge to the mortgage company
- your practice is duty bound to explain to the mortgagor that the borrower will need to adhere to 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
- the minimum level of cover for the policy must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- your firm are responsible for approving the terms of the local search policy on behalf of the mortgage company
- your firm is obliged to disclose to the insurer all relevant information which you have gathered
- the local search indemnity insurance policy needs to be for the benefit of the lender and, wherever possible, for the benefit of the borrower and any subsequent registered proprietor or lender. If the mortgagor will not be protected by the local search indemnity insurance policy, you must advise the borrower of this fact.
- your firm must provide 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 may be required if there is supplemental lending against the mortgaged property
- the local search indemnity insurance policy must not contain conditions which you know would void or prejudice the interests of the lender
| Lender | Requirement |
|---|---|
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| Cynergy Bank | The market value of the property. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| JPMorgan | 110% of principal sum. |
| Legal & General Home Finance | The policy should be for the full market value of the property and indexed linked. The policy must be for our benefit, and for the benefit of the borrower where available. The policy must benefit all successors and assigns. |
| Lloyds TSB Scotland | The value of the property |
| M&S Bank | the value of the insurance must be for at least the full value of the property |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the advance. |
| Mortgage Express | Amount of loan + 15% |
| 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. |
| 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). |
| 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). |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| Scottish Widows | The value of the property. |
| St James Place | 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. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| Whistletree | 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. |
Local Search Contingency Insurance : Reflections
The extent of the terms for local search indemnity insurance are set out in the policy document. Conveyancing solicitors should direct the borrower to the local search indemnity insurance policy paperwork. Local Search indemnity insurance is devised to afford indemnity in respect of the risks set out in the policy schedule - so it is essential check the schedule to determine that it is correct. The continuance of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.Significant aspects and benefits of local search Contingency insurance :
Protection via such a policy is to cover the risk of third parties looking to enforce rights that can affect the use of a property. Local Search indemnity insurance Cover normally includes- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Diminution in value resulting from the successful enforcement of the risks specified in the local search insurance.
- Reimbursement for compensation incurred in any action regarding the risks specified in the local search policy, as well as legal and associated costs.
- The cost of 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 policy, 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.
- All sums paid with the written consent of the insurance company to liberate the land from the risks specified in the local search policy.
Always check what is excluded from the local search indemnity insurance e.g. does the policy cover any property that has been altered within the year prior to the policy being put on risk? Are legal costs covered?
Local Search Indemnity Insurance has limitations - Additional considerations
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from local search insurance may be adequate for your client. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the bank approved panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the lender 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 above information is in relation to properties in England and Wales.