Bank conveyancing panel conditions re Local Search Indemnity Insurance
Leeds Building Society and Coventry BS, like the majority of banks, have their own specific instructions when it comes to local search indemnity insurance. This page sets out to enlighten property law lawyers on the various bank approved list of panel lawyers where the title to be charged includes local search. Lawyers are advised to familiarise themselves with the CML handbook requirements for each bank, whether it be Yorkshire Bank Home Loans, Barclays or Bank of Scotland. The information on this page is not focused on local search indemnity insurance requirements.
Need help with local search indemnity insurance from your lender?
Birmingham Midshires and Natwest in common with many banks, obligations require that where local search indemnity insurance is effected:
- the local search indemnity insurance policy must be placed on risk at no expense to the lender
- you is obliged to disclose to the insurer all relevant information which you have obtained
- the local search indemnity insurance policy should always be for the benefit of the bank and, wherever possible, for the benefit of the borrower and any next registered proprietor or bank. Where the mortgagor will not be covered by the local search indemnity insurance policy, you must advise the mortgagor of this fact.
- you are responsible for approving the terms of the local search policy on behalf of the lender
- the level of indemnity must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- your practice must spell out 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 lender of any notice or potential claim in relation to the policy
- the local search indemnity insurance policy must not incorporate conditions that you are aware would void or prejudice the interests of the lender
- your practice must supply a duplicate of the local search indemnity insurance to the borrower and explain to the mortgagor why the local search indemnity insurance policy was effected and that a further policy might be mandatory if there is supplemental borrowing against the mortgaged property
| Lender | Requirement |
|---|---|
| Barnsley 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. |
| Clydesdale Bank | Open market value of property. |
| Coutts Finance | The open market value of the property according to the valuation report. |
| Coventry Building Society | Minimum of the value of the property. |
| Darlington Building Society | The higher of value or purchase price of the property. |
| Dudley Building Society | Purchase price or valuation, whichever is higher. |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Gen H | An amount equal to the value of the property unless specifically agreed in writing otherwise. |
| Holmesdale Building Society | 110% |
| 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. |
| 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. |
| Mortgage Express (No 2) | [This lender has not published an answer to this question. Please contact the lender.]
|
| 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. |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
| Whistletree | The value of the property |
| 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. |
Local Search Contingency Insurance : Reflections
The full terms, conditions and exclusions for local search indemnity insurance are explained in the policy document. Property lawyers are obliged to point the borrower to the local search indemnity insurance policy paperwork. The intention of local search indemnity insurance is to grant indemnity in respect of the risks set out in the policy schedule - so you should check the document to determine that it is correct. The duration 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.Local Search indemnity insurance: Important features and benefits:
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 Policies should be checked for the following- Cover for compensation incurred in any action regarding the risks specified in the local search insurance, as well as solicitors charges.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development started, 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 order.
- Diminution in value due to the successful enforcement of the risks specified in the local search indemnity insurance.
- 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.
- All sums paid with the written consent of the insurance company to free the land from the risks specified in the local search policy.
Don't forget to consider what is excluded from the local search indemnity insurance e.g. does the policy cover any property that has been altered within the 12 months prior to the commencement of the policy? Does it cover legal costs?
Local Search Indemnity Insurance has limitations - Additional considerations
Local Search Indemnity insurance isn’t a solution to all of the relevant problems. Content on this webpage is for general information for Regulated law firms in England and Wales on the the lender approved panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the bank 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.