Indemnity Insurance of Local Search Bank conveyancing obligations
Birmingham Midshires and Santander, in common with the majority of banks, have their own requirements when it comes to local search indemnity insurance. The content herein aims to help conveyancing solicitors on the numerous mortgage company conveyancing panel where the title to be charged contains local search. It is not a substitute for checking the Council of Mortgage Lenders’ handbook requirements for each bank, be it Virgin Money, Godiva Mortgages or Halifax. The content on this page is not focused on local search indemnity insurance requirements.
Need help with local search indemnity insurance from your lender?
Coventry BS and Lloyds TSB like most banks, requirements are that where local search indemnity insurance is to be put on risk:
- your practice is required to reveal to the insurer all relevant information which you have obtained
- your firm must supply 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 additional insurance may be mandatory if there is additional lending against the security of the property
- your firm are responsible for approving the terms of the local search policy on behalf of the bank
- you must point out to the borrower that the borrower is obliged to comply with any conditions of the local search indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in respect of the insurance
- the local search indemnity insurance policy should always be in favor of the lender and, if possible, for the benefit of the borrower and any subsequent registered proprietor or mortgage company. If the mortgagor will not be protected by the local search indemnity insurance policy, you must advise the mortgagor of this fact.
- the local search indemnity insurance policy should not contain conditions that you recognise would void or compromise the interests of the lender
- the local search indemnity insurance policy must be placed on risk without cost to the lender
- the minimum level of cover for the policy must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
| Lender | Requirement |
|---|---|
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Barclays plc | Higher of purchase price or valuation |
| Better HomeOwnership | An amount to cover the mortgage advance as a minimum. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Bradford & Bingley | Amount of loan + 15% |
| Co operative Bank | An amount equal to at least 110% of the mortgage advance. |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| 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. |
| Intelligent Finance | 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. |
| LendInvest | An amount at least equal to the valuation of the property. |
| Magellan Homeloans | At least equal to the value of the property |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Principality Building Society | Full market value of the property is preferred but if this is not available we will accept the loan advance amount as minimum. You must approve the policy on our behalf. The estimated property value is stated in the Mortgage Offer in remortgage cases. Otherwise it will be stipulated in the Valuation. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| RBS- First Active | An amount equal to the value of the property. |
Non lender-specific considerations
The extent of the terms for local search indemnity insurance are explained in the policy document. Conveyancing Practitioners should point your non-lender client to the local search indemnity insurance policy paperwork. Local Search Contingency insurance is designed to provide indemnity in respect of the risks set out in the policy schedule - so it is essential check the schedule to ensure it is correct. The lifetime 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.Significant characteristics and benefits of local search indemnity insurance :
The policy 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 Cover normally includes- The cost of works (including professional fees) for the purpose of the development started, before the commencement of 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 order.
- The out of pocket expenses 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 local search indemnity insurance.
- All ancillary costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- Cover for compensation incurred in any proceedings in respect of the risks specified in the local search insurance, including legal and associated costs.
- Money paid with the written consent of the insurance company to liberate the property from the risks specified in the local search policy.
Always consider what is excluded from the local search policy e.g. does the policy cover any property that has been altered within the 12 months prior to the commencement of the policy? Are legal costs covered?
Local Search Indemnity Insurance has limitations - Other 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 contained within 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 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 covers to properties in England and Wales.