Indemnity Insurance of Local Search Lender conveyancing instructions
Lloyds TSB and Coventry BS, in common with most banks, set their own requirements when it comes to local search indemnity insurance. This page is designed to help domestic conveyancing solicitors on the various mortgage company approved list of panel lawyers where the title to be charged includes local search. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each bank, be it Yorkshire Bank Home Loans, Halifax or Birmingham Midshires. The information on this page is not focused on local search indemnity insurance requirements.
Need help with local search indemnity insurance from your lender?
Nationwide and HSBC as with the majority of mortgage companies, obligations require that where local search indemnity insurance is to be taken out:
- 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 next registered proprietor or mortgage company. Where the borrower will not be protected by the local search indemnity insurance policy, you must advise the borrower of this fact.
- the local search indemnity insurance policy must not incorporate terms that you recognise would invalidate or prejudice the interests of the bank
- the local search indemnity insurance policy must be effected at no charge to the bank
- the limit of indemnity must meet the requirements for the lender (See Part II Handbook requirements )
- your firm must send a duplicate of the local search indemnity insurance to the mortgagor and explain to the mortgagor why the local search indemnity insurance policy was effected and that a further policy may be required if there is additional borrowing against the security of the property
- your firm are responsible for approving the terms of the local search policy on behalf of the mortgage company
- you must explain to the mortgagor that the borrower must 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 insurance
- your firm is obliged to disclose to the insurer all relevant information which you have gathered
| 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. |
| Allied Irish Bank | At least the amount of the mortgage advance. |
| Bradford & Bingley | Amount of loan + 15% |
| Ecology Building Society | An amount equal to at least 110% of the mortgage advance |
| GE Money | GE Money Home Lending has withdrawn from the UK mortgage market. |
| Habito | Higher of purchase price or valuation |
| 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. |
| Hodge | An amount equal to 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, the borrower(s) and any successor in Title. |
| Hodge Equity Release | An amount equal to 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, the borrower(s) and any successor in Title. |
| JPMorgan | 110% of principal sum. |
| 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. |
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Reliance Bank | \xA31,000,000.00 |
| Rely 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). |
| 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. |
Non lender-specific considerations
The extent of the terms for local search indemnity insurance are explained in the policy document. Conveyancing Practitioners are obliged to point the borrower to the local search indemnity insurance policy document. The intention of local search indemnity insurance is to provide indemnity in respect of the risks specified in the policy schedule - so you should check any draft 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. It is well worth checking that the time frame is correct.Local Search Contingency insurance: Significant characteristics and benefits:
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the local search indemnity insurance schedule. Local Search indemnity insurance Policies should be checked for 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 indemnity insurance.
- Reimbursement for compensation incurred in any proceedings concerning the risks specified in the local search policy, including incurred costs and expenses.
- 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 taking down 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.
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, before the commencement of proceedings for the enforcement of the risks specified in the local search policy, to the extent that such costs are rendered abortive by court order.
- Loss in market value resulting from the successful enforcement of the risks specified in the local search insurance.
Don't forget to check what is excluded from the local search indemnity insurance e.g. does the policy cover any residence that has been altered within the 12 months prior to the commencement of the policy? Does it cover legal costs?
Supplemental considerations for local search indemnity insurance
Local Search insurance may satisfy lenders such as Accord or Natwest 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 bank conveyancing 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 content set out above is in relation to properties in England and Wales.